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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 (28)

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.
Its time to stop building cucked companies and start building black market infrastructure
User's avatar npub1mznw...6mak
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 →
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.
User's avatar npub1mznw...6mak
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 →