DeFi Platforms Triumph Over Controversial IRS Reporting Rule
DeFi platforms celebrated a notable victory this week.The U.S. Treasury scrapped a burdensome IRS reporting rule, offering relief to these platforms. On June 10th, the Treasury removed the requirement for DeFi companies to issue IRS 1099-DA forms for user transactions.
This change followed earlier action by Congress. Legislatives overturned the rule using the Congressional Review Act in early 2023,with President Trump supporting the decision. Critics argued that the rule hindered DeFi growth and contradicted its core principle of decentralization.
- DeFi platforms no longer need to submit customer information to the IRS.
- The repeal only affects non-custodial DeFi apps; centralized exchanges still follow the old rules.
- All DeFi users must still report their financial activities and track personal gains or losses.
Post-repeal, DeFi operations remain unaffected by mandatory transaction reporting. However, users bear the responsibility of reporting their earnings separately. Experts like Miller Whitehouse-Levine view this as the preservation of user privacy and fostering of DeFi innovation. Conversely, stringent regulations might divert DeFi advancements globally.
defi protocols function independently, lacking legal entities, making compliance challenging.Nonetheless, some centralized initiatives misuse the DeFi label for marketing, underscoring the complexity in regulating this evolving sector.
