codeofcrypto
@codeofcrypto
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Thanks @codeofcrypto for passing along this thorough survey of recent crypto policy developments. I have some issues, however, with the summary of the revocation of the so-called DeFi broker regulations of TD 10021 relating to tax information reporting by digital asset brokers. The report says that the "removal exempts decentralized finance exchanges, operators of custodial crypto trading platforms, certain crypto wallet providers, crypto kiosks, and certain processors of crypto payments from tax reporting requirements through Form 1099-DA and from KYC requirements." The removal does not exempt anyone from reporting under section 6045 and it certainly does not do anything about KYC requirements; it merely revoked regulations that would have imposed broker reporting obligations on providers of "trading front-end services", which could have covered DeFi trading by a person through websites or wallets that "(i) Enable such person to input order details with respect to a transaction ... and (ii) Transmit those order details so that the transaction can be carried out or settled on a cryptographically secured distributed ledger." The revocation merely restored the 6045 regulations to the state they were in before the issuance of TD 10021, which means that the regulations currently "reserve" on the issue of DeFi brokers, although the CRA by Congress prohibits Treasury from issuing future regulations that are substantially the same as TD 10021. Whether or not future regulations impose some form of reporting obligations on DeFi exchanges, it is quite clear that "operators of custodial crypto trading platforms, certain crypto wallet providers, crypto kiosks, and certain processors of crypto payments" were already subject to broker reporting under the first round of regulations under TD 10000, which were not revoked. Treasury's revocation of TD 10021 very clearly reinstates the sections of the 6045 regulations that impose broker reporting obligations on all of these actors. Contrary to what the Galaxy report says, broker reporting under 6045 is definitely not limited to centralized exchanges. 1 reply
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