Summary
IRS form 1099-DA may require American DeFi users to report self-custodial wallet addresses. Crypto exchanges and potentially DeFi traders may be classified as brokers by the IRS. Concerns about privacy and pseudonymity in the industry. Unclear if IRS will change course before implementation in 2025. Legal experts predict potential court battles over the classification of DeFi users as brokers.
Key Points
1. The draft IRS form 1099-DA has caused concern within the crypto industry, as it may require American DeFi users to report their self-custodial wallet addresses to the federal government.
2. Crypto exchanges are likely to be considered brokerages by the IRS, but there is uncertainty surrounding the classification of DeFi traders as brokers as well.
3. The inclusion of “Unhosted Wallet Provider” on the draft form suggests that the IRS is planning to classify DeFi protocols as brokerage firms, potentially impacting user privacy and pseudonymity in the crypto space.