The Daily: IRS finalizes tax rule requiring 'DeFi brokers' to collect user trading information, Do Kwon's US extradition and more

Happy Friday! In today's daily, the U.S. Internal Revenue Service finalizes tax rules requiring DeFi brokers to collect user trading details, the Montenegro justice minister signs former Terraform Labs CEO Do Kwon's extradition to the United States, bitcoin keeps above $96,000 as investors eye AI and DeFi tokens and more.

Let's get started. 

US IRS finalizes tax rule requiring 'DeFi brokers' to collect user trading information

The IRS finalized rules requiring decentralized finance (DeFi) brokers to report gross proceeds from digital asset sales.

• DeFi brokers will have to collect user trade data, issue 1099 forms for tax reporting and provide names, addresses and other customer details.
• The U.S. Department of Treasury claims these regulations align digital asset reporting with traditional assets, simplifying tax filing while addressing compliance gaps.
• Critics argue that DeFi's decentralized nature makes such regulations challenging, as many platforms lack centralized entities for user data collection.
• The rules, effective starting Jan. 1, 2027, originated from the 2021 Infrastructure Investment and Jobs Act and has faced legal and legislative challenges. 
• Industry groups like the Blockchain Association plan to oppose the rule changes.

Montenegro justice minister signs Do Kwon’s extradition to US

Montenegro's minister of justice, Bojan Božović, signed an order to extradite Terraform Labs co-founder Do Kwon to the United States.

• The Ministry of Justice considered factors like the severity of the crimes, location of the offenses and extradition requests from both the U.S. and South Korea in its decision.
• Kwon was arrested in Montenegro for using forged documents and faced a prolonged extradition deadlock between competing U.S. and South Korean requests.
• The extradition case sparked political controversy in Montenegro, with accusations of financial ties influencing government preferences toward South Korea.

Bitcoin holds above $96,000 while investors turn to AI and DeFi tokens for growth opportunities

Bitcoin remains above $96,000 in a consolidation phase after a recent correction from its record high surpassing $108,000.

• Bitcoin ETFs saw $475 million in inflows, signaling growing institutional confidence as easing inflation creates a favorable environment for risk assets.
• Investors are exploring emerging digital asset trends such as AI-driven tokens like ai16z and DeFi-focused projects like HyperLiquid, which are projected to grow further next year.
• While a strong U.S. dollar and higher interest rates pose risks for cryptocurrencies, analysts highlight robust support levels, institutional activity and potential pro-crypto policies as reasons for optimism in bitcoin's future outlook.

Bitget to burn 40% of total supply of BGB and introduce quarterly burns

Bitget intends to burn 40% of its native token supply to boost its value, totaling 800 million BGB worth $6.8 billion.

• Starting in 2025, Bitget will burn tokens quarterly using 20% of profits from its exchange operations and crypto wallet in a Binance-inspired strategy.
• Bitget announced on Dec. 26 the merger of its Bitget Wallet Token (BWB) into Bitget Token (BGB) to create a unified token ecosystem, with no change to total supply and a conversion rate of 11.68 BWB to 1 BGB.
• Bitget also released an updated whitepaper outlining the future roadmap and ecosystem development for the BGB token.

Bitwise, Ramaswamy's Strive file for ETFs investing in companies with bitcoin treasuries

Two new ETFs, Bitwise Bitcoin Standard Corporations ETF and Strive Bitcoin Bond ETF, aim to capitalize on the growing trend of companies adopting BTC as part of their treasuries, according to SEC filings.

• Bitwise's ETF will invest in companies holding over 1,000 BTC, weighting them by the value of their bitcoin holdings, while Strive's ETF focuses on convertible securities from firms investing heavily in bitcoin.
• The rise in bitcoin treasury adoption is evident as companies like KULR Technology and Semler Scientific make substantial bitcoin investments, which industry experts describe as an increasing trend among mainstream firms.

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