Internal Revenue Service in the United States Has Finalized Regulations

The Internal Revenue Service in the United States has finalized regulations requiring brokers of decentralized finance (DeFi) to report digital asset transactions.

The U.S. Internal Revenue Service has finalized regulations that require brokers of decentralized finance (DeFi) to report digital asset transactions to the service, according to an official statement.

Now, brokers must report gross proceeds on Form 1099 and capture information about users, such as names and addresses, starting January 1, 2027. The rules hit front-end service providers such as those operating portals into decentralized protocols but stop short of the protocols themselves.

This places DeFi brokers on an equal footing with traditional securities brokers in terms of their tax reporting duties and responsibilities. According to Acting Assistant Secretary for Tax Policy Aviva Aron-Dine, the measures aim to create a fair playing field and render reporting more uniform for taxpayers.

DeFi brokers will also have to report transactions of all digital assets, including non-fungible tokens and stablecoins. The IRS estimates that the rules will affect 650 to 875 brokers and as many as 2.6 million taxpayers. The brokers will begin collecting and reporting data in 2026 in preparation for implementation in 2027.

Industry advocates have maintained that digital assets should not be subject to the traditional securities regimes due to the need for specialized regulations. The IRS and Treasury disagree, asserting that digital asset transactions do require such oversight.