Analysis: DeFi applications without front-end, non-upgradeable contracts or no fees are three potential options for responding to the US IRS broker rules

Recently, the U.S. Internal Revenue Service (IRS) reporting rules identified DeFi front-ends as brokers, which has brought shocks to the crypto industry. It is reported that the U.S. Treasury and the IRS received more than 44,000 comments after proposing the rule. Alex Thorn, head of research at Galaxy Digital, outlined three potential options for DeFi if the IRS rule is not revoked. He said that DeFi services and applications can comply with IRS reporting requirements and accept broker identification, try to block users from the United States, or give up smart contract upgrades and revenue generation. Thorn wrote: "Under the proposal, DeFi applications that do not have a front-end website, have non-upgradeable contracts, and do not charge any 'consideration' (i.e., no fees) in the process of disposing digital assets can be exempted from being designated as 'brokers'. In other words, highly decentralized applications cannot understand the situation and therefore cannot comply with broker reporting requirements." (Cointelegraph) Previously, the U.S. Treasury Department and the U.S. Internal Revenue Service finalized the tax reporting requirements for specific cryptocurrency brokers (RIN 1545-BR39, TD 10021). Afterwards, the U.S. Blockchain Association announced on the X platform that it had filed a lawsuit with the DeFi Education Fund and the Texas Blockchain Council to question the IRS's broker rules.