DeFi has 3 options if IRS rule isn't rolled back — Alex Thorn
The IRS has designated decentralized finance (DeFi) front-ends as brokerages, prompting significant backlash from the crypto industry. Alex Thorn from Galaxy Digital outlined three potential responses for DeFi: comply with IRS reporting, block U.S. users, or cease smart contract upgrades and revenue generation. Thorn noted that highly decentralized applications might be exempt from broker designation if they do not collect fees or have front-end websites. The IRS's final rule, effective in 2027, categorizes trading front-end service providers as brokerages, including decentralized exchanges. Industry leaders criticized the timing of the rule and labeled it government overreach. A joint lawsuit was filed against the IRS by the Texas Blockchain Council, Blockchain Association, and DeFi Education Fund, claiming unlawful actions by the Treasury and IRS.
