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The IRS just finalized its new broker rule, finding that control is not necessary to be considered a broker subject to IRS reporting requirements. It's a nightmare for every non-custodial exchange and swap provider. Built a website to let users swap between currencies? You're a broker under IRS reporting requirements. Built a mobile app to let users swap between currencies? You're a broker under IRS reporting requirements. Built a browser extension to let people swap between currencies? You're a broker under IRS reporting requirements. As long as you have the ability to collect fees on a trade, or have the ability to affect the terms under which a trade is provided, or a whole bunch of other nonsense, you're a broker, which makes pretty much any non-custodial exchange or swap provider a broker. While wallets without swap or exchange features are excluded by the broker rule, it's a taste of what's to come for BSA reporting requirements for non-custodial software. INB4: "bUt ThEy CaN'T FoRcE mY nOn-CuStOdIaL wAlLeT tO Do aNyThiNg" That's right they can't. But they can force the people building the software and services. And if they don't, they'll go to jail. Unless challenged, the rule goes into effect in 2027.
The Rage
Broker Rule: IRS Requires Non-Custodial Services To Report Trading Information
Custody over funds is not necessary to be considered a broker by the IRS.

Replies (54)

It seems that at least some of the 5th circuit ruling (admittedly one (and only?) circuit, and criminal vs reporting requirement) in Tornado cash could come into play here, Both the post-Chevron rulemaking authority of an agency. And even though a tornado cash smart contract is "back-end", the extent of "front-end" code control is similar to that described in the tornado opinion. This would also seem to require addtional code to comply with, which might raise some "force speech" issues.
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All this will accomplish is to drive innovation to a regulation friendly jurisdiction. Doesn't sound like the Trumpified crypto dominance being spun. IRS might just cause an "own goal" and collide with the new evolving economies. Hubris, threats and irrelevance will be their undoing. Bankers no longer control the commanding heights of the global economic engine. It now rides on light and is subject game theory.
It's just code. This goes completely against the current consensus of the U.S. judicial system. If it stands for long, it will not be successfully enforced except to drive some innovation out of the U.S. and into alternative countries or into cyberspace with develipers with better opsecs. It will likely not even stick around under the current court atmosphere.
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Its time to stop building cucked companies and start building black market infrastructure
L0la L33tz's avatar L0la L33tz
The IRS just finalized its new broker rule, finding that control is not necessary to be considered a broker subject to IRS reporting requirements. It's a nightmare for every non-custodial exchange and swap provider. Built a website to let users swap between currencies? You're a broker under IRS reporting requirements. Built a mobile app to let users swap between currencies? You're a broker under IRS reporting requirements. Built a browser extension to let people swap between currencies? You're a broker under IRS reporting requirements. As long as you have the ability to collect fees on a trade, or have the ability to affect the terms under which a trade is provided, or a whole bunch of other nonsense, you're a broker, which makes pretty much any non-custodial exchange or swap provider a broker. While wallets without swap or exchange features are excluded by the broker rule, it's a taste of what's to come for BSA reporting requirements for non-custodial software. INB4: "bUt ThEy CaN'T FoRcE mY nOn-CuStOdIaL wAlLeT tO Do aNyThiNg" That's right they can't. But they can force the people building the software and services. And if they don't, they'll go to jail. Unless challenged, the rule goes into effect in 2027.
The Rage
Broker Rule: IRS Requires Non-Custodial Services To Report Trading Information
Custody over funds is not necessary to be considered a broker by the IRS.
View quoted note →
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Building the software is an easy fix -- move the git repos to Tor. Sort of surprised this isn't more common yet especially afyer Samourai. Though you could also access clearnet repos from behind a Tor exit. Or just post to Sourceforge from behind a Russian proxy if your name rhymes with Batoshi Lakamoto. Moving fiat around ourside their reach though is much harder, at least without chasing off the normies. Might not be long before you're buying Bitcoin for gift cards (which you can already do on Bisq). That all said, it'd be a weird move to create a strategic reserve AND destroy demand for that asset all at the same time. Though perhaps the play is to try to turn Bitcoin into money for governments, and lock the plebs into fiat, much like Bretton Woods did with gold. Run your node, stack your sats, and stay cipherpunk as fuck.
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Interesting times ahead especially for swap services like TrocadorApp. At the end this leads to more Monero adoption. Many ppl have a Bitcoin stack and use Monero for payments. They need swap services. If that isn't possible anymore I can imagine that many of them leave Bitcoin for good image and use Monero only. When they arrested the Samourai Wallet devs we saw a spike with Monero transactions. That's why I think we can see that again and with that a steady growing as more people have to think more careful how to route around the financial system. If you don't re-think your goals with Bitcoin you will be trapped sooner or later.
L0la L33tz's avatar L0la L33tz
The IRS just finalized its new broker rule, finding that control is not necessary to be considered a broker subject to IRS reporting requirements. It's a nightmare for every non-custodial exchange and swap provider. Built a website to let users swap between currencies? You're a broker under IRS reporting requirements. Built a mobile app to let users swap between currencies? You're a broker under IRS reporting requirements. Built a browser extension to let people swap between currencies? You're a broker under IRS reporting requirements. As long as you have the ability to collect fees on a trade, or have the ability to affect the terms under which a trade is provided, or a whole bunch of other nonsense, you're a broker, which makes pretty much any non-custodial exchange or swap provider a broker. While wallets without swap or exchange features are excluded by the broker rule, it's a taste of what's to come for BSA reporting requirements for non-custodial software. INB4: "bUt ThEy CaN'T FoRcE mY nOn-CuStOdIaL wAlLeT tO Do aNyThiNg" That's right they can't. But they can force the people building the software and services. And if they don't, they'll go to jail. Unless challenged, the rule goes into effect in 2027.
The Rage
Broker Rule: IRS Requires Non-Custodial Services To Report Trading Information
Custody over funds is not necessary to be considered a broker by the IRS.
View quoted note →
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Just set up sites on Tor and I2P and the IRS will have an aneurysm.
L0la L33tz's avatar L0la L33tz
The IRS just finalized its new broker rule, finding that control is not necessary to be considered a broker subject to IRS reporting requirements. It's a nightmare for every non-custodial exchange and swap provider. Built a website to let users swap between currencies? You're a broker under IRS reporting requirements. Built a mobile app to let users swap between currencies? You're a broker under IRS reporting requirements. Built a browser extension to let people swap between currencies? You're a broker under IRS reporting requirements. As long as you have the ability to collect fees on a trade, or have the ability to affect the terms under which a trade is provided, or a whole bunch of other nonsense, you're a broker, which makes pretty much any non-custodial exchange or swap provider a broker. While wallets without swap or exchange features are excluded by the broker rule, it's a taste of what's to come for BSA reporting requirements for non-custodial software. INB4: "bUt ThEy CaN'T FoRcE mY nOn-CuStOdIaL wAlLeT tO Do aNyThiNg" That's right they can't. But they can force the people building the software and services. And if they don't, they'll go to jail. Unless challenged, the rule goes into effect in 2027.
The Rage
Broker Rule: IRS Requires Non-Custodial Services To Report Trading Information
Custody over funds is not necessary to be considered a broker by the IRS.
View quoted note →