The Internal Revenue Service (IRS) has recently proposed a new tax reporting rule that has raised concerns within the decentralized finance (DeFi) and cryptocurrency communities. This rule, known as the "broker rule," has been criticized for its potential negative impacts on non-custodial and open platforms.
Marisa Coppel, an expert in tax law, argued at a hearing that clear congressional authorization is necessary before the Treasury can expand the IRS's jurisdiction. She highlighted the detrimental effects of the broker rule on DeFi and crypto platforms.
The broker rule, if implemented without proper congressional authorization, could have significant consequences for non-custodial and open platforms. These platforms, which operate on decentralized networks, may not have the necessary infrastructure to comply with the reporting requirements imposed by the IRS.
It is crucial for Congress to carefully consider the implications of the broker rule on the DeFi and crypto industry. Clear congressional authorization should be obtained before expanding the IRS's jurisdiction. This will ensure that the tax reporting requirements are fair and reasonable, taking into account the unique characteristics of decentralized platforms. By doing so, Congress can support innovation in the DeFi and crypto space while also ensuring compliance with tax regulations.
