XRP advocate Attorney John Deaton criticized the new crypto tax reporting rule issued by the Biden administration. The regulation titled “Gross Income Reporting by Brokers Providing Digital Asset Sales” presented by the IRS was evaluated negatively for decentralized finance (DeFi) by Deaton.
Scope of New Tax Rules
The IRS’s latest announcement requires brokers to facilitate digital asset transactions, report gross receipts, and provide Form 1099 to clients. This regulation also includes collecting information such as users’ names and addresses.
Deaton stated that these rules unfairly target DeFi platforms. DeFi’s autonomous and permissionless smart contracts cannot comply with these requirements without central control or intermediaries that can collect user data.
“Implementing such requirements on DeFi will stifle innovation and cause developers and projects to move abroad.”
Criticism of Attitude Towards Cryptocurrencies
The lawyer also criticized Senator Elizabeth Warren’s anti-crypto stance and her dealings with the banking industry. He stated that Warren’s financial policies and strict crypto regulations are hindering industry growth.
The new regulations impose broker-like responsibilities on front-end service providers that interact with users and offer decentralized protocol access, while exempting DeFi protocols from reporting obligations. Deaton stated that this situation creates operational difficulties for businesses in the DeFi ecosystem.
Deaton, new regulations, Senator Warren’s Bitcoin $96,653.7 He compared it to a previous legislative effort to ban self-storage. He said the rules undermine decentralization and user privacy, which are core principles of DeFi.
These finalized regulations will come into force on January 1, 2027 for the industry to comply with. The IRS explained that these rules are intended to subject DeFi brokers to the same tax reporting obligations as traditional securities brokers. The crypto advocate demanded that the new Congress prioritize reversing these rules.
Rolling back regulations to prevent developers and projects from moving abroad could be important for the growth of the crypto industry within the United States.
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that crypto currencies carry high volatility and therefore risk, and should carry out their transactions in line with their own research.
