DEX must KYC! The IRS in the United States is pushing for digital asset trading tax laws, the encryption industry is experiencing fierce Rebound

The US Internal Revenue Service (IRS) finally confirmed on Friday the controversial digital asset trading tax reporting regulations, requiring certain 'Decentralized Finance brokers' to report the total proceeds from digital asset sales and provide 1099 tax forms to customers, collecting user transaction information. This provision is expected to take effect in 2027. The Department of the Treasury and the IRS finalized the controversial digital asset trading tax reporting regulations on Friday, requiring certain 'Decentralized Finance brokers' to report the total proceeds from digital asset sales to customers and provide 1099 tax forms (used to report non-employee compensation income), collecting user transaction information, including names and addresses, following the same reporting rules as securities brokers. The provision is expected to take effect on January 1, 2027, or later. The Department of the Treasury explained in the announcement that 'Decentralized Finance brokers' refers to front-end service providers that directly interact with customers in digital asset trading, such as Decentralization exchange (DEX). The final regulations do not consider Decentralized Finance protocol operators or protocol software developers as brokers, but apply to entities that operate the main websites for user access to Decentralized Finance protocol. This means that Uniswap Labs may be affected by the expanded definition of brokers by the IRS, as it maintains the most active website interacting with DEX on uniswap.org, although it is currently unclear how the rules will take effect. The IRS estimates that the rules will affect up to 2.6 million taxpayers and 875 Decentralized Finance brokers. This final rule, which will take effect in 2027, is part of the Infrastructure Investment and Jobs Act passed by the Biden administration in 2021, which first mentioned the idea of strengthening tax enforcement for Cryptocurrency service providers in Congress. The IRS first issued a draft regulation on tax reporting requirements for Cryptocurrency brokers in August last year, and subsequently issued a revised version, requiring exchanges to comply with new rules that will take effect in 2025. In April of this year, the IRS issued the first 1099-DA tax form specifically for brokers to report digital asset trading income, proposing to include wallet service providers, Decentralization platforms, and payment processors in the broker scope, causing widespread industry concerns and privacy and security issues, warning that this will greatly hurt the Decentralized Finance industry. This final regulation on Friday has sparked strong criticism from participants in the Cryptocurrency industry, emphasizing the difference between Cryptocurrency and traditional assets, and Decentralized Finance service providers face more challenges in 'establishing information collection and reporting systems'. Miles Jennings, General Counsel of a16z Crypto, claimed that the rule represents a wonderful expansion of the term 'realization of trade', allowing the IRS to ban Decentralized Finance. Call for the new Congress to overturn the rules. Several industry executives have issued a series of criticisms in the community, with Bill Hughes, Global Regulatory Affairs Director of Consensys, the parent company of Metamask, pointing out on Friday: 'First, lawsuits will be filed claiming that the rule exceeds the authority of the Treasury Department and violates the Administrative Procedure Act. Subsequently, the rule may undergo congressional review and may be rejected, just like the vote on SAB 121 this year. The fight continues.' Alexander Grieve, Vice President of Government Affairs at venture capital firm Paradigm, said that 'the new Congress that supports Cryptocurrency can and should use the CRA process next year to overturn these provisions.' The Congressional Review Act (CRA) is often used by legislators to 'overturn actions of certain federal agencies.' Jake Chervinsky, Chief Legal Officer of Variant, said: 'This illegal rule is the dying struggle of the anti-encryption army losing power. It must be overturned by the courts or the incoming government.' Decentralized Finance zone performance. In the market, the Decentralized Finance zone does not seem to be greatly affected by this rule, mainly due to the fall of BTC. CoinGecko data shows that its overall Market Cap fell by 0.7% in the past 24 hours, but several major coins experienced larger falls, including Chainlink at -7.3%, Curve Dao at -6.8%, Hyperliquid at -4.9%, Aave at 5.7%, Ethena at -5.4%, and Uniswap at -2.9%. Related reports. Crackdown on Cryptocurrency tax evasion! The US IRS proposes new rules, with the CEO of Messari criticizing: The Biden administration will 'hinder encryption innovation.' US Senator: The IRS should accelerate the implementation of new tax rules and force exchanges to disclose customer information. The US annual tax evasion of encryption reaches 37.1 billion, IRS report: more than half did not actively declare, and investigative actions have increased. The article 'DEX must KYC! The US IRS strongly promotes digital asset trading tax law, and the encryption industry fiercely rebounds' was first published on BlockTempo, the most influential blockchain news media in the industry.