If the US Internal Revenue Service ultimately recognizes DeFi front-end as a 'broker', the DeFi industry will face a difficult decision

According to BlockBeats, on December 29th, Alex Thorn, the head of research at Galaxy Digital, stated that if the US Internal Revenue Service (IRS) does not revoke its designation of DeFi front-end as a "broker," the DeFi industry will face three choices: comply with IRS reporting requirements and accept broker designation, attempt to block users from the US, and abandon smart contract upgrades and revenue generation. BlockBeats reported yesterday that the US Internal Revenue Service (IRS) has issued final regulations requiring brokers to report digital asset transactions, incorporating decentralized finance (DeFi) platforms into existing tax frameworks. This rule will come into effect in 2027 and will require brokers to disclose transaction details, including total earnings and taxpayer information. Brokers must start collecting and reporting data from 2026. The US Internal Revenue Service estimates that 650 to 875 DeFi brokers will be affected, potentially impacting up to 2.6 million taxpayers. These regulations mainly target 'front-end service providers' for transactions, such as decentralized trading platforms (DEX) that facilitate digital asset trading. According to the US Internal Revenue Service, these platforms play intermediary roles and classifying them as brokers will help ensure tax compliance.