The U.S. government's attempts to impose traditional financial reporting requirements on decentralized finance (DeFi) platforms have faced significant opposition and are being repealed. Experts argue that applying outdated regulations designed for banks to decentralized platforms would be disastrous and that policymakers should rethink their approach. The IRS rule that sought to classify DeFi platforms as brokers and force them to report transaction details to the IRS has been met with resistance, as it ignores the technological complexities of DeFi and the fact that they do not hold user assets. Industry leaders believe that regulatory efforts should focus on addressing security vulnerabilities and developing a coherent governance framework for decentralized autonomous organizations instead of fixating on taxation. Excessive regulation could drive DeFi activity out of the U.S., similar to what has already happened with centralized exchanges. The lack of a clear regulatory framework and inconsistent policies make it difficult for crypto businesses, institutional investors, and DeFi developers to plan long-term strategies. In contrast, the European Union has established a unified legal framework for crypto, providing clear guidelines across the region. The upcoming White House Crypto Summit may influence the next phase of U.S. crypto regulation and determine if the U.S. can maintain its leadership in digital assets.



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