How the IRS’s Proposed Crypto Tax Rule Could Reshape U.S. Blockchain Compliance

In August 2023, the U.S. Department of Treasury and the Internal Revenue Service (IRS) introduced a proposed rule that could dramatically reshape how cryptocurrencies are taxed, reported, and regulated in the United States.

While the stated intent is to bring more clarity and fairness to crypto taxation, the actual scope of the proposal is causing widespread concern across the blockchain industry. Developers, exchanges, and tax professionals alike warn that the regulation’s overly broad definitions could stifle innovation, restrict DeFi participation, and jeopardize user privacy — all while creating impossible compliance burdens for decentralized protocols.

At its core, the proposed rule aims to define who qualifies as a “broker” in the digital asset ecosystem. The implications, however, reach far beyond simple tax reporting. If implemented as written, this framework could transform how blockchain projects function in the U.S. — from how they issue token grants and process payroll to whether they can even operate legally within U.S. borders.

As a crypto-native employer of record and token compensation administrator, Toku helps global organizations remain compliant across jurisdictions. This analysis breaks down what the IRS’s proposed rule means for U.S. taxpayers, blockchain startups, and token-issuing organizations — and explores what the future of compliant crypto operations may look like.

Background: From the Infrastructure Act to the IRS’s Proposed Rule

1. The IIJA: A Legislative Turning Point for Digital Asset Reporting

The Infrastructure Investment and Jobs Act (IIJA), signed into law in November 2021, marked the first major federal legislation to explicitly address digital asset tax reporting in the United States.

Buried within its 2,700 pages was a brief but powerful amendment to the Internal Revenue Code, requiring that “brokers” of digital assets report user transactions to the IRS — similar to how traditional brokerage firms report stock trades.

At the time, the crypto industry expressed cautious optimism. Clearer reporting frameworks could help legitimize crypto in the eyes of regulators and institutional investors, while ensuring taxpayers understood their obligations.

However, the law also introduced a key ambiguity: Who exactly counts as a “broker”?

In traditional finance, a broker is straightforward — an intermediary who executes trades on behalf of clients. But in crypto, the ecosystem is decentralized. Users can trade peer-to-peer, use automated smart contracts, or swap assets on decentralized exchanges (DEXs) without an intermediary.

Applying the same rules to this decentralized context was always going to be complex — and potentially dangerous if handled without technical nuance.

2. The IRS Responds: The August 2023 Proposed Rule

On August 25, 2023, the U.S. Treasury and the IRS released a proposed rule intended to implement the IIJA’s reporting mandates. The agencies’ goal was to close perceived tax gaps by expanding the definition of “brokers” to include a wide range of digital asset intermediaries.

The proposed language defines a “broker” as “any person who, in the ordinary course of a trade or business, effectuates transfers of digital assets on behalf of another person.”

This deceptively simple phrase introduces sweeping implications. Under this definition, “brokers” could include:

• Centralized crypto exchanges (e.g., Coinbase, Kraken);
• Decentralized exchanges (e.g., Uniswap, SushiSwap);
• Wallet providers and payment processors (e.g., MetaMask, Stripe);
• Potentially even smart contracts that automatically facilitate transactions.

The proposed rule would require these “brokers” to:

• Collect user information (name, address, taxpayer ID);
• Report transaction details (type, amount, gross proceeds, and wallet address);
• Submit this data both to the IRS and to users, much like a 1099 form for crypto.

The intent was to make crypto tax enforcement easier — giving the IRS visibility into on-chain activity and helping users correctly report capital gains and income. However, in practice, the proposed rule’s scope is technologically unworkable for decentralized systems that lack centralized control or user identification.

3. Why This Matters: The Collision Between Law and Code

The blockchain ecosystem is fundamentally different from traditional financial infrastructure. Smart contracts and decentralized protocols do not have employees, KYC systems, or servers that can collect personal data on users.
By applying traditional financial compliance models to permissionless networks, the IRS proposal risks creating impossible legal obligations for developers and protocol operators — many of whom cannot comply even if they wanted to.

This disconnect between regulatory intent and technical feasibility has become one of the biggest flashpoints in U.S. crypto regulation.
As written, the rule would not only force developers to redesign protocols but could also criminalize normal blockchain activity that relies on anonymity and decentralization.

In short:

• The IRS aims to improve tax transparency.
• The industry warns it may destroy open blockchain systems in the process.

Toku’s analysis focuses on this tension — between compliance and innovation — and its potential downstream effects on employers, employees, and token projects operating in the United States.

Backlash from the Community: A Clash Between Innovation and Regulation

The crypto industry’s reaction to the IRS’s proposed rule was swift, unified, and overwhelmingly negative. Within days of its release, developers, legal experts, venture capital firms, and advocacy groups raised concerns that the rule’s implementation — if left unchanged — would not only be impractical to enforce but could also cripple U.S. blockchain innovation for years to come.

The public comment period generated over 120,000 responses, an unprecedented level of engagement for a Treasury or IRS proposal. From large industry players to independent engineers, the message was consistent: the rule, as written, is incompatible with the fundamental architecture of decentralized technology.

1. Operability Concerns: “You Can’t Regulate Code Like a Company”

Perhaps the most obvious flaw in the proposal is its misunderstanding of how decentralized systems work.

Under the proposed definition, “brokers” would include decentralized exchanges (DEXs) — platforms that are typically governed by smart contracts, not human intermediaries.

As one industry coalition put it in its public response:

“A smart contract cannot collect, store, or report personally identifiable information. Requiring DeFi protocols to do so is like requiring email servers to verify the identity of every sender and recipient — technically impossible.”

This requirement, if enforced, would create unrealistic compliance burdens for both developers and users.

• Developers could face liability for code that automatically executes trades or token transfers — even if they no longer control it.
• Users could find themselves unable to access DeFi platforms that can’t perform the required reporting functions.

In short, the proposed rule applies a centralized reporting framework to a decentralized ecosystem, creating a compliance paradox that no existing system can solve.

2. Privacy and Data Protection Risks

Another major concern centers on privacy — a foundational principle of blockchain technology.

The proposed rule would require exchanges and other service providers to report not only user identities but also wallet addresses and transaction-level details directly to the IRS.

While the IRS argues this transparency would help enforce fair taxation, privacy advocates warn of catastrophic data security risks.

By linking real-world identities to blockchain addresses, the IRS (and any future data breaches) could expose a complete map of individuals’ financial activities — including token holdings, transfers, and DeFi interactions — all of which are permanently visible on-chain.

As Jerry Brito, Executive Director of Coin Center, stated:

“This rule doesn’t just create a surveillance regime — it creates a centralized honeypot of sensitive financial data that will be impossible to secure indefinitely.”

Such data consolidation contradicts principles of financial privacy that even traditional banking laws protect, such as the Fourth Amendment and Right to Financial Privacy Act. For an industry built on self-custody and pseudonymity, this represents a direct philosophical and operational threat.

3. Stifling Innovation: “The U.S. Will Lose Its Crypto Edge”

Many leading U.S. crypto companies fear that the IRS proposal could drive innovation offshore, accelerating the ongoing migration of projects to more favorable jurisdictions such as Singapore, Switzerland, and the United Arab Emirates.

By classifying nearly every digital asset intermediary as a broker, the U.S. risks criminalizing innovation by default.

Sarah Millby, representing The Blockchain Association, summarized this in her statement to regulators:

“The proposal would create unworkable reporting requirements for a wide array of participants in the digital asset ecosystem and would cause projects to shut down operations or move offshore, inhibiting U.S. innovation in blockchain technology.”

Similarly, Brian Armstrong, CEO of Coinbase, cautioned:

“Coinbase is happy to help customers fulfill tax obligations. But this proposal defines ‘brokers’ so broadly that it could apply to almost anyone in the crypto ecosystem — including developers, validators, and wallet providers.”

The unintended consequence is that the very entities advancing transparency, usability, and infrastructure in Web3 would bear the greatest regulatory burden.

Instead of closing the tax gap, the rule could hollow out the domestic crypto ecosystem, forcing legitimate projects to relocate abroad while leaving behind less compliant or lower-quality actors.

4. Inclusion of Stablecoin Transactions: A Misguided Expansion

One particularly contentious element of the proposal is its inclusion of stablecoin transactions under the same reporting framework.

Stablecoins, designed to maintain a fixed value (e.g., $1 USD per token), generally do not generate capital gains or losses — meaning there’s often nothing to report for tax purposes.

However, the IRS’s proposal would still require brokers to track and report every stablecoin transfer, no matter how small or routine. This means every stablecoin payment, swap, or payroll transaction could generate a new tax form — flooding users and the IRS alike with irrelevant data.

As one industry analyst noted:

“If you buy a coffee with USDC, you could technically trigger a reportable event under this rule. It’s an absurd level of granularity that does nothing to improve tax compliance.”

This overreach could paralyze everyday crypto use cases, undermining one of the most promising bridges between digital assets and real-world commerce.

5. The Broader Implication: Policy Made Without Technical Understanding

In sum, the backlash reflects a disconnect between regulatory intention and technological reality.

While the Treasury and IRS are correct in seeking better reporting and accountability, the execution — as written — ignores the decentralized nature of crypto, potentially criminalizing software development itself.

If enacted, the rule would:

• Force DeFi protocols and DAOs to either centralize or shut down.
• Expose user identities to mass data collection.
• Create redundant and unenforceable reporting obligations.
• Push innovation and liquidity to offshore jurisdictions.

These are not hypothetical risks; they are predictable outcomes of applying old-world financial frameworks to a new technological paradigm.

What Does This Mean for U.S. Projects Issuing Token Grants?

For token projects and DAOs based in the United States, the proposed IRS rule represents a significant inflection point. While much of the public debate has centered on exchanges and wallet providers, token-issuing organizations — especially those that compensate employees or contractors with tokens — will also face serious second-order consequences.

The immediate relief is that under the current version of the proposed rule, companies issuing token grants to employees are not explicitly categorized as “brokers.” However, this technical exclusion does not mean token projects will be unaffected.

In practice, the ripple effects will touch every stage of the token compensation lifecycle — from issuance and liquidity management to tax withholding, reporting, and treasury rebalancing.

1. Definitional Relief — But Operational Constraints

The IRS proposal’s definition of a broker focuses on entities that “effectuate transfers of digital assets on behalf of another person.” Token grants, by contrast, are employer-to-employee transfers, typically governed by compensation contracts rather than open-market trades.

Because these transfers occur as part of employment rather than exchange services, token issuers are technically exempt from broker classification — at least for now.

However, this exemption does not shield organizations from the practical limitations imposed by the rule:

• Token issuers will still need to interact with brokers (e.g., exchanges, custodians, or OTC desks) for liquidity events, sell-to-cover tax transactions, or secondary listings.
• If these brokers are forced to comply with excessive reporting and KYC requirements, the issuers themselves will face downstream friction in moving tokens.
• In extreme cases, newly launched tokens may become illiquid in the U.S. until the issuer completes additional broker registration or listing compliance steps.

In short: while token projects may not be “brokers,” they could still find themselves operating inside a closed loop, unable to freely transfer or monetize their own assets.

2. Liquidity Challenges for Treasury and Payroll

Liquidity — the ability to convert tokens to fiat for payroll, taxes, or business expenses — is the lifeblood of any crypto organization.

Under the proposed rule, however, liquidity pathways could narrow dramatically.

If decentralized exchanges (DEXs) are treated as brokers and must collect user data, many will block U.S. users entirely rather than attempt compliance.

That would leave U.S.-based projects with only centralized exchanges as liquidity outlets — all of which will have to meet stringent reporting, KYC, and record-keeping requirements.

This creates several downstream challenges for token-based employers:

• Sell-to-cover transactions (where part of a token grant is sold to cover tax obligations) may no longer be feasible if DEX liquidity is unavailable.
• Treasury diversification — selling native tokens to acquire stablecoins or fiat for operations — could be severely restricted.
• Token issuance planning may need to account for longer lock-up periods or reduced market access, especially for newly launched tokens that are not yet listed with compliant brokers.

In essence, U.S.-based token treasuries could find themselves operationally isolated, unable to execute basic payroll and compliance functions that rely on open token liquidity.

3. Tax Compliance Becomes a Moving Target

Token compensation already sits at the intersection of tax, payroll, and securities regulation. The IRS proposal introduces new complexity by making it harder to access compliant liquidity — precisely when employers need it to meet their tax obligations.

Under existing frameworks:

• When a token vests, its fair market value (FMV) must be calculated to determine the taxable amount.
• The employer must withhold income taxes and remit those taxes in fiat to the IRS.
• If the employer uses a sell-to-cover strategy, it must sell a portion of vested tokens immediately to raise fiat for tax payments.

But if decentralized liquidity sources disappear, sell-to-cover operations become much harder to execute — forcing companies to either:

• Fund tax payments entirely in fiat (increasing cash burn), or
• Delay settlements and risk non-compliance with withholding deadlines.

Without a clear on-ramp to liquidate tokens compliantly, tax remittance workflows could break down entirely.

This poses a serious operational risk for U.S. employers trying to stay compliant while compensating staff in crypto.

4. Compliance Boundaries and the “Broker” Risk Creep

Even if token issuers are initially exempt from broker classification, regulatory creep is inevitable. Once the rule is finalized, the Treasury may interpret certain token issuance or redemption activities as “broker-like,” depending on how tokens are transferred or managed.

For instance:

• A company that redeems or buys back token grants from employees could be seen as “effectuating transfers of digital assets.”
• A DAO that distributes tokens through smart contracts may be treated as a “broker” if those smart contracts facilitate peer-to-peer transfers.
• Employers that allow employees to trade vested tokens within a corporate portal could inadvertently create a “brokered marketplace,” triggering registration obligations.

If these interpretations materialize, projects could face the same burdens as centralized exchanges, including:

• Tax information reporting (Forms 1099-DA or equivalent),
• Customer identification procedures (KYC/AML), and
• Record-keeping obligations for every transaction.

Even conservative token operations — such as issuing RTUs or RTAs — could suddenly require complex reporting infrastructure previously reserved for financial intermediaries.

5. Impact on Smart-Contract-Based Payroll and Token Distribution

A less-discussed casualty of the proposed rule is smart-contract-based payroll — one of the most efficient innovations in crypto HR operations.

Projects that use automated smart contracts to stream salaries or vest tokens would become non-compliant by design, as these systems cannot collect personal information or issue tax forms.

This includes:

• Continuous streaming payroll systems,
• Onchain vesting schedules (e.g., Hedgey, Sablier), and
• Treasury management contracts automating token distribution.

If these contracts were to be considered “brokers,” every automated transfer could become a reportable event, effectively making DeFi-based HR automation illegal in the U.S.

This not only undermines the efficiency gains of onchain compensation systems but could also discourage companies from adopting Web3-native tools altogether — a step backward for operational innovation.

6. The Strategic Shift: Why Offshore Incorporation May Surge

If the proposed rule passes unchanged, many U.S.-based projects may conclude that compliance is logistically impossible — and choose to relocate abroad.

This trend is not speculative; we’ve already seen similar migrations during earlier U.S. regulatory crackdowns (e.g., ICO enforcement waves of 2018–2019).

Jurisdictions such as Singapore, the Cayman Islands, the British Virgin Islands, and Switzerland have established more flexible crypto compliance regimes that balance oversight with operational freedom.

Projects domiciled in these jurisdictions could:

• Continue leveraging decentralized liquidity sources;
• Compensate employees in tokens with fewer compliance barriers;
• Avoid U.S. broker-reporting requirements altogether.

While this exodus might preserve short-term flexibility for token projects, it would erode U.S. leadership in blockchain innovation — the very outcome policymakers say they want to avoid.

7. What This Means for Employers and Employees

For organizations issuing token-based compensation:

• Expect increased compliance overhead for any U.S.-based employees or contributors.
• Begin preparing for multi-layered tax reporting across jurisdictions.
• Maintain close coordination with legal counsel and compensation administrators (like Toku) to ensure grant documentation, valuation, and FMV reporting remain compliant.

For employees and contractors:

• Anticipate stricter KYC and data disclosures when receiving or selling tokens.
• Recognize that liquidity options may shrink, affecting your ability to convert vested tokens into fiat.
• Consider proactive tax planning (e.g., 83(b) elections where applicable) to mitigate exposure.

Ultimately, while U.S. token projects may not be direct “brokers,” the proposed rule creates a compliance bottleneck that indirectly affects how every token is granted, vested, and sold.

As the IRS expands its reach into digital assets, the intersection of HR, tax, and DeFi will only become more complex — underscoring the need for crypto-native compliance infrastructure.

What Does This Mean for U.S. Taxpayers?

If the IRS’s proposed digital asset reporting rule becomes law, everyday crypto users — not just large exchanges — will feel the impact.

The rule would fundamentally alter how U.S. citizens interact with decentralized finance (DeFi), manage self-custody wallets, and even receive token-based compensation.

What began as a policy aimed at improving tax transparency could evolve into one of the most far-reaching financial surveillance regimes in modern history.

1. A New Era of Visibility: Every Wallet Could Be Linked to a Real Identity

Under the proposed rule, “brokers” (including any entity that facilitates digital asset transfers) would be required to collect and report users’ personally identifiable information (PII) — names, addresses, taxpayer identification numbers — alongside detailed transaction data.

In practice, this means:

• Every transaction — no matter how small — could be linked to an individual’s legal identity.
• Wallet addresses would no longer be pseudonymous once connected to a broker’s system.
• The IRS would gain direct visibility into users’ on-chain financial history — including holdings, transfers, and DeFi activity.

Because blockchain ledgers are public and immutable, this effectively creates a permanent, government-accessible map of your financial behavior, something that has never existed at this scale in traditional finance.

Privacy experts warn that even with the best data security practices, no centralized database is immune to breaches.

If such sensitive data were leaked or hacked, the financial lives of millions of Americans could be exposed in full detail — down to every token transfer and NFT purchase.

2. Everyday DeFi Becomes Legally Risky

For most crypto users, interacting with DeFi protocols like Uniswap, Aave, or Compound is second nature. However, the proposed rule would classify many of these protocols as “brokers” — despite being autonomous pieces of software that cannot collect or verify user data.

Since DeFi smart contracts have no ability to perform KYC or generate IRS-compliant reports:

• Using them could technically violate the law, even for simple swaps or liquidity transactions.
• Developers and DAOs may block U.S. IP addresses to avoid legal exposure.
• Ordinary users might have to abandon DeFi entirely or rely on intermediaries that impose heavy compliance steps.

This would make the U.S. one of the most restrictive jurisdictions for open finance, effectively banning self-custody DeFi activity for taxpayers who want to remain compliant.

A blockchain engineer commenting anonymously put it succinctly:

“If this rule passes, Americans won’t be able to legally interact with DeFi — unless DeFi stops being decentralized.”

3. Non-Custodial Wallets Could Be Caught in the Crossfire

Non-custodial wallets like MetaMask, TrustWallet, or Phantom enable users to hold and transact crypto without intermediaries.

But because these wallets allow users to connect directly to decentralized apps (dApps), the IRS proposal could interpret them as “facilitating digital asset transfers.”

If wallet providers fall under the “broker” definition, they would be required to:

• Collect user KYC information upon wallet creation.
• Report wallet-to-wallet transactions to the IRS.
• Potentially block or flag non-compliant on-chain interactions.

This would destroy one of the defining principles of crypto ownership — self-custody without permission.

Even more problematic, wallet software can’t realistically track ownership across multiple devices, multisigs, or smart contracts — creating impossible compliance burdens for developers.

In other words: non-custodial wallets may either centralize under regulation or cease operations in the U.S. altogether.

4. Overlapping and Redundant Tax Reporting

One overlooked consequence of the rule is the redundancy of data collection. Because multiple entities could be deemed “brokers” for a single transaction, taxpayers might receive multiple tax reports for the same activity.

For example, if you swap USDC for ETH on a decentralized exchange using MetaMask:

• The DEX might issue one 1099 report (if it can).
• The wallet provider could issue another.
• A payment processor (if used) might file a third.

The IRS could then receive three overlapping reports for a single transaction — while you, the user, struggle to reconcile contradictory data at tax time.

This complexity would not only overwhelm individual taxpayers but also flood the IRS with redundant, low-value data, making enforcement less effective rather than more.

Tax professionals have warned that this could lead to:

• Mass confusion during tax season, especially for those using multiple wallets or exchanges.
• Incorrect income assessments due to duplicate or mismatched transaction data.
• Increased audit risk for honest taxpayers trying to comply in good faith.

5. The Death of On-Chain Anonymity

At the philosophical core of crypto lies the right to financial privacy — the ability to transact without revealing your identity.

The IRS proposal effectively ends that tradition for U.S. citizens.

Once your wallet is connected to a broker and reported to the IRS, your entire transaction history — past and future — becomes traceable.

Even if only one of your wallet addresses is identified, blockchain analytics can easily deanonymize all connected wallets, revealing:

• Portfolio composition
• Transfer patterns
• Interactions with specific protocols or addresses

For early crypto adopters and employees receiving token-based compensation, this creates new personal security risks.

Publicly linking identities to wallet addresses could expose individuals to targeting, scams, or even physical threats.

What’s more troubling is that these disclosures wouldn’t just affect individuals — they could also reveal employer or project-level data, including payroll patterns, token allocations, and treasury movements.

6. Friction in Everyday Transactions

One of the IRS’s stated goals is to “simplify taxpayer compliance.” Ironically, the proposed rule would do the opposite for everyday crypto users.

Simple actions like:

• Swapping tokens
• Paying freelancers in stablecoins
• Receiving airdrops
• Participating in DAOs
  …could all trigger reportable events requiring taxpayer data collection and cross-reporting.

Even stablecoin transfers — which often represent 1:1 USD payments — would fall under the rule, meaning users could theoretically receive tax forms for zero-gain transactions.

This will likely drive everyday users to:

• Avoid small crypto transactions altogether,
• Shift their activity offshore, or
• Move to privacy-preserving chains and mixers (which the U.S. has aggressively sanctioned).

The end result? Less tax compliance, not more.

By making the system unworkably complex, the IRS could push well-intentioned users away from transparency and into gray-market solutions.

7. Broader Economic and Cultural Implications

If adopted, the rule would have broad economic consequences beyond taxation:

• Developers may refuse to build in the U.S. for fear of legal liability.
• Startups may relocate to crypto-friendly jurisdictions like Singapore, Portugal, or the UAE.
• Investors may lose access to promising DeFi projects as U.S. IP addresses are geo-blocked.
• Employees may face liquidity issues if their token grants become difficult to sell compliantly.

At a macro level, the U.S. risks sacrificing its leadership position in digital innovation, creating an innovation vacuum that other regions will gladly fill.

Just as the internet’s early regulatory overreach slowed progress in some sectors, an overly aggressive tax rule could set back U.S. blockchain competitiveness for years.

8. For the Average Taxpayer: What Should You Do Now?

While the proposed rule has not yet been finalized, it’s critical for U.S. taxpayers involved in crypto to:

1. Keep detailed transaction records — including timestamps, FMV data, and cost basis for all token activity.
2. Use compliant custodians and exchanges that already provide IRS reporting (where feasible).
3. Avoid unregistered DeFi protocols until clearer guidance emerges.
4. Consult crypto-specialized tax professionals for guidance on 83(b) elections, grant vesting, and cross-border reporting.
5. Monitor the final rulemaking process closely — as definitions may evolve before implementation.

At Toku, we help organizations and individuals navigate these evolving regulatory frameworks with confidence. Our Token Grant Administration (TGA) platform ensures tax-accurate valuations, compliant documentation, and transparent reporting, allowing teams to focus on building rather than bureaucracy.

Balance Compliance and Innovation in the Next Era of Crypto Regulation

The IRS’s proposed digital asset reporting rule represents a defining moment for the U.S. crypto industry.

At its core, the proposal seeks to close the tax gap and ensure fairness — goals that most responsible actors in the blockchain ecosystem, including Toku, fully support.

However, as currently written, the rule reflects a fundamental misunderstanding of decentralized technology and threatens to create more chaos than clarity.

By imposing centralized compliance obligations on decentralized systems, the rule risks:

• Crippling the operability of DeFi and smart-contract-based applications,
• Forcing crypto organizations and treasuries to relocate offshore,
• Exposing users to privacy and data-security risks, and
• Creating redundant and unmanageable reporting burdens for taxpayers and the IRS alike.

This is not the way to achieve tax transparency. True compliance cannot come at the expense of innovation, privacy, or feasibility.

A Call for Smarter, Crypto-Native Regulation

The blockchain industry has evolved far beyond its early experimental phase. Today, thousands of legitimate organizations — from Layer-1 protocols to fintechs and DAOs — are building on this technology to create real economic value.

But these builders need clear, workable rules, not sweeping regulations that treat every smart contract like a stockbroker.

As the leading provider of token compensation and crypto payroll compliance, Toku believes that crypto-native regulation — designed around how blockchain actually operates — is the only sustainable path forward.

This means:

• Recognizing the distinction between software protocols and financial intermediaries,
• Designing digital-asset tax frameworks that account for volatility, liquidity, and vesting mechanics
• Establishing clear guidance on employer token grants and compensation reporting, and
• Supporting infrastructure that automates compliance without undermining decentralization.

If regulators work collaboratively with industry experts, the U.S. can strike the right balance — protecting taxpayers while maintaining its leadership in digital innovation.

Toku’s Mission: Simplify Compliance Without Sacrificing Progress

At Toku, we have always believed that compliance and innovation must coexist.

Our mission is to help organizations pay their global teams compliantly — in fiat, stablecoins, or native tokens — without ever compromising legal or tax obligations.

Through our Token Grant Administration platform, Global Payroll, and Employer-of-Record (EOR) services, Toku provides:

• Automated tax calculations and filings across 100+ jurisdictions,
• Built-in AML/KYC safeguards for token-based compensation,
• Transparent FMV tracking and sell-to-cover execution for token grants, and
• SOC 2-certified security to protect sensitive financial and personal data.

These capabilities allow crypto organizations to focus on what matters most — building — while Toku ensures they remain fully compliant in a rapidly changing regulatory landscape.

Looking Ahead

The crypto industry is entering a new era of accountability. Regulatory oversight will continue to expand — but it doesn’t have to come at the cost of creativity or growth.

By embracing frameworks that are technically informed, internationally consistent, and transparent by design, we can achieve the best of both worlds: compliant innovation.

Toku will continue to advocate for thoughtful regulation, support our clients through policy changes, and collaborate with global partners to shape the standards of tomorrow’s token economy.

As the IRS and Treasury finalize their rulemaking, one thing remains clear — crypto’s future cannot be built on outdated assumptions.

It must be built on collaboration, clarity, and compliance that empowers innovation rather than extinguishing it.

Make Crypto Compliance Simple with Toku

Whether you’re a startup issuing your first token grants or an enterprise managing global crypto payroll, Toku provides the infrastructure, expertise, and compliance coverage you need.

Skip the uncertainty — build with confidence.

Talk to Toku today.

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