DeFi platforms are now classified as brokers under new IRS rules, requiring KYC and transaction reporting.
Compliance with these regulations is challenging due to decentralization and may alienate privacy-focused users.
DeFi platforms face three options: comply, block U.S. users, or fully decentralize, each with its own risks.
The New DeFi Regulations from the IRS
On December 27, 2024, the IRS released a final rule that may change the course of decentralized finance (DeFi) forever. The rule classified DeFi front-end platforms as brokers, similar to those in decentralized exchanges (DEXs). This means that Uniswap, among other similar exchanges. Must now implement KYC protocols and then report millions of detailed pieces of transaction data to the IRS. It’s set to go live in 2027 but is already making waves through the industry.
DeFi platforms were originally designed to operate in a decentralized and privacy-centric manner. The new IRS regulations, however, challenge thes
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