The tax man is coming for the DeFi platform nearest to you. At least in the United States. Obviously here in the UK we've always been expected to pay tax on any "disposed assets", including crypto, where profit has been made beyond the allowance. It's a lot more complex than that but that's the gist of it.

The IRS in the US has now released a definitive opinion that DeFi front ends are "brokers", which means they have a certain level of reporting requirements. The way DeFi is designed, however, there's almost no way of capturing all the information the IRS wants. In the end this is going to lead to these platforms leaving the United States for more favourable environments.

I use Crypto.com for some transactions and they collect KYC information for EVERY transaction I make there. For ever deposit I have to give a name for the owner of the wallet, and from whence the funds came. Some DeFi frontends, probably the larger ones like UniSwap, will probably implement something like this. Others will simply stop working in the US. Of course that's what VPNs are for.

This is following the IRS earlier doubling down on collecting taxes from crypto staking rewards. I think that's going to eventually affect us here on Hive as we have some of the best staking products in the world. Hey, maybe we'll get the IRS before mass adoption 😂

Peace & Love,

Adé