The United States Internal Revenue Service (IRS) has issued final regulations requiring brokers to report digital asset transactions, expanding existing reporting requirements to include front-end platforms, such as decentralized exchanges.

Set to take effect in 2027, the rules mandate that brokers disclose gross proceeds from sales of cryptocurrencies and other digital assets, including information regarding taxpayers involved in the transactions.

The final regulation says “the only DeFi participants that are treated as brokers [...] are trading front-end service providers.”

The document does not directly apply to all DeFi applications and their level of decentralization, focusing on front-ends as a source of information and tax disclosure.

The reporting requirements apply to front-end platforms that facilitate transactions involving digital assets for customers, such as decentralized exchanges.

The definition encompasses platforms performing intermediary functions in facilitating transactions, including a group of persons facilitating transactions “whether or not the group operates through a legal entity.”

Under the new rules, if a DeFi platform is involved in facilitating the exchange or sale of digital assets — even through smart contracts — and it exercises sufficient control or influence over the transaction process, it could meet the definition of a broker.