TechFlow news, on December 29, Alex Thorn, Head of Research at Galaxy Digital, stated that if the U.S. Internal Revenue Service (IRS) does not withdraw its rule classifying DeFi frontends as "brokers," the DeFi industry will face three choices: comply with IRS reporting requirements and accept broker designation, attempt to block users from the United States, or abandon smart contract upgrades and revenue generation.
Alex Thorn said: "Under this proposal, DeFi applications without frontend websites, possessing non-upgradable contracts, and not receiving any 'consideration' (i.e., charging no fees) during digital asset dispositions could be exempt from being designated as 'brokers.' In other words, highly decentralized applications would lack the necessary visibility to comply with broker reporting requirements."
Previous report, the U.S. IRS classified DeFi frontends as brokers and will begin taxing DeFi starting in 2027.
