The US Treasury and Internal Revenue Service (IRS) have announced new tax guidelines for cryptocurrency brokers, which will come into effect in 2025. This move aims to increase transparency and compliance in the digital asset space. However, the IRS has delayed making a decision on decentralized finance (DeFi) activities and unhosted wallet providers, seeking more time to review the feedback received from the public.

The new rules require cryptocurrency brokers, including trading platforms and hosted wallet services, to report customer transactions and gains to the IRS. This will help align crypto brokers with traditional investment firms, making it easier to file tax returns. The IRS has clarified that stablecoin transactions and non-fungible token (NFT) sales will also be subject to reporting, but with certain exceptions for small transactions.

The DeFi sector and unhosted wallet providers have been given a temporary reprieve, as the IRS seeks more time to review the comments received from the public. The agency has acknowledged the challenges of regulating non-custodial entities, which may not have the necessary customer data or transparency frameworks. The final rules for these entities are expected to be released later this year.

Industry stakeholders have expressed concerns about the potential overreach of the new rules and the burden of compliance on entities that do not traditionally function as brokers. The IRS estimates that the new rule will affect around 15 million people and 5,000 firms. In response, the agency has stated that it aims to balance the need for comprehensive reporting with the industry's capacity to comply.

In conclusion, the new crypto tax rules announced by the US Treasury and IRS mark a significant step towards increasing transparency and compliance in the digital asset space. While the DeFi sector and unhosted wallet providers have been given a temporary reprieve, they will need to wait until later this year for clarity on their regulatory requirements. As the crypto industry continues to evolve, it remains to be seen how these rules will shape the future of digital assets in the US.