The U.S. Treasury is wasting no time trying to get control of crypto transactions and the world of decentralized finance (DeFi). Its new report, The American Families Plan Tax Compliance Agenda, shows just how serious the IRS is about the threat to its bottom line: “Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion,” reads the report. “This is why the President’s proposal includes additional resources for the IRS to address the growth of cryptoassets.”
The main selling point of DeFi is that all transactions are automatic, regulated only by the terms of smart contracts and, importantly, without central authorities. If you’re wondering, in the U.S., the IRS is “the” central authority. Clearly, they are not pleased about DeFi.
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This new report is the opening gambit from the U.S. Government. Unsurprisingly, it is dealing with the symptom (potential lost tax revenue), rather than the cause. For the IRS to truly do what they say they are intending to do, America will need to adopt financial policies indistinguishable from China’s recently publicized DeFi policy.
Pay attention to this. It is a fight that will escalate quickly. Taxes are the lifeblood of every government. You can’t monitor or verify DeFi transactions unless you monitor internet access. It might be time to reread 1984. Have a great weekend.
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Author’s note: This is not a sponsored post. I am the author of this article and it expresses my own opinions. I am not, nor is my company, receiving compensation for it. I am not a financial advisor. Nothing in this article should be considered financial advice. If you are considering any type of investment you should conduct your own research and, if necessary, seek the advice of a licensed financial advisor.