The exponential growth of decentralised finance (DeFi) has brought access to, and interest in, these platforms to a wider range of users — from individuals to institutional investors and multinational organisations. The technology makes sophisticated finance transactions available to all kinds of users in a variety of locations. Although other jurisdictions (e.g. the UK) have started issuing tax guidance in this area, to date taxation of DeFi transactions has not been specifically addressed in published guidance by US tax regulators.
This PwC insight outlines the fundamental features of a DeFi ecosystem, and highlights how they can affect the US taxation of the transactions entered into through the ecosystem.