IRS finalizes controversial tax reporting rule for brokers, punts decision on DeFi

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Defi,Infrastructure,Legal

Crypto lobbyists feared ambiguous language in earlier drafts would harmfully impact many parts of the crypto industry.

The Internal Revenue Service released late Friday the latest version of its controversial “broker rule” guidance.

“Good news: They agree that custodial brokers are, well, brokers,” Coin Center Chief Communications Office Neeraj Agrawal said in a post on X. “Our concern is whether or not a self-custodial application that is just code with no central authority would be considered a broker too.” “The Treasury Department and the IRS would benefit from additional consideration of issues involving non-custodial industry participants,” the filing reads.

The proposed regulations — which build on efforts to expand IRS regulation over crypto transaction tax reporting in the Infrastructure Investment and Jobs Act from 2021 — would not only have expanded the number of entities treated as brokers but also vastly expand the type of entities obligated to report under 1099 tax reporting requirements .

 

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