Pro-XRP Lawyer John Deaton Comments On New Crypto Tax Rule

by

As an analyst with years of experience in the cryptocurrency market, I find myself increasingly alarmed by the recent moves from regulatory bodies such as the IRS. The newly finalized crypto tax reporting rule is a perfect example of this trend. Pro-XRP lawyer John Deaton’s criticism of these regulations echoes my own concerns regarding their potential impact on decentralized finance (DeFi).

Lawyer John Deaton, who is a supporter of XRP, has spoken out against a fresh set of tax reporting guidelines for cryptocurrencies that were recently published by the Biden administration. This rule, named “Reporting Gross Proceeds by Brokers Frequently Involved in Digital Asset Sales,” was proposed by the Internal Revenue Service (IRS). Deaton has referred to this regulation as harmful for Decentralized Finance (DeFi).

Pro-XRP Lawyer John Deaton Criticizes New IRS Rules

In response to a recent declaration from the Internal Revenue Service (IRS), John Deaton has voiced apprehensions regarding the freshly established crypto tax guidelines. Under these regulations, brokers are required to manage digital asset transactions, report total earnings, and provide clients with Form 1099. This duty encompasses gathering user information like names, addresses, and other details.

Deaton contended that the regulations are unjust towards Decentralized Finance (DeFi) systems, because autonomous and open-source smart contracts can’t meet these demands. The reason being, these smart contracts don’t have a central authority or intermediaries to collect user information since they operate without central control or intermediaries.

The lawyer added, 

Imposing these types of regulations on Decentralized Finance (DeFi) could hinder creativity, as it may push developers and their projects towards international jurisdictions instead.

Furthermore, a proponent of cryptocurrencies has lately spoken out against Senator Elizabeth Warren’s negative stance towards crypto and her apparent alliance with the banking sector. He claimed that Warren’s impact on financial policies and stringent cryptocurrency regulations have hindered the industry’s development.

Impact of Reporting Obligations on Decentralized Finance

The rule imposes broker-like responsibilities on front-end service providers interacting with users and offering decentralized protocol access. However, the regulation excludes the DeFi protocols themselves from reporting requirements. Critics, including John Deaton, believe this creates operational challenges for entities in the DeFi ecosystem.

Deaton drew a parallel between the latest rule and an earlier legislative attempt led by Senator Elizabeth Warren, which he deemed effectively outlaws personal ownership of Bitcoin. He argued that these regulations weaken decentralization and individual privacy, two key components underlying the essence of Decentralized Finance (DeFi).

Additionally, John Deaton pointed out that these regulations might push developers and initiatives overseas, moving them outside the U.S. Such a move, as per Deaton, may impede the domestic development of the digital asset sector.

Additionally, he implied that these late regulations could be designed as a response to the incoming administration’s predicted pro-cryptocurrency standpoint.

The finalized regulations are set to take effect on January 1, 2027, giving the industry a window to adapt. The IRS has clarified that these rules aim to bring DeFi brokers under the same tax reporting obligations as traditional securities brokers. The crypto advocate urged the new Congress to prioritize reversing these rules, citing their potential to harm DeFi innovation.

Deaton comments come amid Donald Trump pledge to make the U.S. the crypto capital by ensuring all remaining Bitcoin is “made in the USA.” However, with 95% of Bitcoin already mined and the introduced crypto tax, this goal faces some challenges.

Read More

2024-12-28 01:05