Redefining “Broker” Could Kill DeFi In America: Blockchain Association
In a recent report, the Blockchain association pointed out that the decentralized finance (DeFi) sector may cease to exist in the United States if the American Treasury and the Internal Revenue Service went ahead to adopt the new tax policy redefinition which they proposed to implement on crypto transactions in the country. The crypto lobbying group besieged the authority to relax their plan to redefine one word to avoid destroying the DeFi sector in America.
According to the report, the IRS, in conjunction with the American Treasury Department, plans to redefine the word ‘broker’ in the country’s tax rules concerning the crypto industry. However, the crypto community stated that should the authorities execute their plan, the decentralized finance sector in the country would be destroyed or forced to move to an offshore environment.
IRS Plans To Broaden Broker Definition
Furthermore, the Blockchain Association reportedly submitted a 33-page comment addressing the one-word redefining the IRS plans to execute. In the document, the crypto lobbying group formally elaborated to the tax collector that its proposed bureaucratic change to the meaning of a broker, which it announced in August, can severely affect the status of the decentralized finance industry in America.
In addition, the crypto alliance group explained that one significant impact of the proposed act is that it would broaden the meaning of a broker as it would relate it with any centralized digital assets exchange that operates in America or to any crypto project designed to directly or indirectly improve digital assets transactions from one person to another.
Among other things, the rule would broaden the term “broker” to apply to any centralized crypto exchange operating in the United States or to any crypto project that directly or indirectly facilitates the transfer of digital assets belonging to another person.
Blockchain Association Slams IRS’ New Rule Proposal
The group argued that the movement would apply to all Decentralized finance protocols, which consequently subjects all centralized and decentralized finance programs to the same compliance regulations as s5ock and bond brokers. The Blockchain Association said the standard is not feasible to implement in the DeFi sector, claiming it would force DeFi projects in the US to shift focus to offshore settlements or push them to extinction.
In a Twitter post, a senior lawyer at the Blockchain Association, Marisa Tashman, stated that the proposed redefinition would out firms whose only means of complying with the law is to ditch the decentralized innovation, which gives them their uniqueness because it would enforce generalization where decentralization initially dominated. Consequently, it would destroy DeFi projects or force them abroad, Tashman tweeted.
In its letter to the IRS agency, the Blockchain Association emphasized that the vital significance of decentralized finance is to leverage smart contracts to develop trustless financial projects that do not allow developers to have control or access to the finance details of users.
IRS To Decide On The New Rule Adoption
In addition, the group claimed that any attempt to centralize wallet addresses by linking them with users’ details would permanently damage users’ privacy as it would expose them.
Explaining further, the association likened the situation to publishing the transaction details of a lifetime credit card online, meaning all the transaction records of the user would be exposed to the entire world to see. The group said the consequence of the proposed plan is not far-fetched and an unacceptable one as no user would want their details exposed.
According to the report, the US authority subjected the proposed IRS rule to 74 days for open comment and criticism from the public in August, and it ends today. During the period, a report showed that the proposed rule has attracted more than 124,000 comments from the public. Furthermore, the IRS reportedly conducted a public hearing concerning the regulation earlier today, while it plans to take a decision on adopting the rule at the end of today.
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