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Strict US crypto tax laws may drive users to decentralised platforms

Strict US crypto tax laws may drive users to decentralised platforms

GrafaGrafa2025/01/17 08:30
By:Liezl Gambe

The United States is implementing new regulations requiring third-party tax reporting on cryptocurrency transactions starting in 2025.

This regulation mandates centralised exchanges and brokers to report digital asset sales and exchanges, helping investors file accurate tax returns and addressing noncompliance issues related to digital currencies.

However, some experts view these regulations as potentially excessive, fearing that they could push users towards decentralised platforms.

Anndy Lian, a blockchain expert, warned that this could create a paradox, where the IRS's efforts to enforce tax compliance could unintentionally encourage users to turn to platforms like Uniswap (CRYPTO:UNI) or PancakeSwap (CRYPTO:CAKE), where tax enforcement is more challenging.

The Blockchain Association has filed a lawsuit against the IRS, arguing that including decentralised exchanges under the term “broker” is unconstitutional and goes beyond reasonable data collection requirements.

At present, transactions on decentralised finance (DeFi) platforms are harder to trace due to the absence of central intermediaries.

However, Lian predicts that advances in blockchain analytics will make DeFi transactions more traceable by 2027.

Additionally, Lian advocates for specialised tax brackets for cryptocurrencies, noting that the volatility of these assets requires a more nuanced tax approach compared to traditional capital gains.

Beyond the U.S., cryptocurrency taxation is gaining attention in other regions.

In Europe, retail investors are now subject to taxation under the new Markets in Crypto-Assets (MiCA) framework, which came into effect for crypto-asset service providers in December 2024.

Dmitrij Radin, founder of Zekret and CTO of Fideum, highlighted that European retail users will increasingly be required to provide tax-related information.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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