The world of cryptocurrency continues to evolve at a rapid pace, shaped by regulatory developments, institutional forecasts, and technological innovation. This week’s key updates highlight major shifts in U.S. tax policy for decentralized finance (DeFi), legal pushback from industry groups, and bold predictions for Bitcoin’s price trajectory through 2025. From IRS reporting mandates to Galaxy Research's bullish outlook and new ETF applications, the ecosystem is entering a pivotal phase of maturation and scrutiny.
New IRS Rules Target “DeFi Brokers” Starting 2027
In a significant regulatory move, the U.S. Internal Revenue Service (IRS) has finalized rules requiring certain "DeFi brokers" to collect and report user transaction data. Published in the Federal Register, these regulations will take effect on or after January 1, 2027.
Under the new framework, entities deemed as "front-end service providers" — such as websites that serve as primary access points to decentralized protocols — will be treated similarly to traditional securities brokers. These platforms must:
- Collect identifying information from users, including names and addresses.
- Report customer transaction histories to the IRS.
- Issue 1099 tax forms to users, just like centralized exchanges.
👉 Discover how new crypto reporting rules could impact your investments.
Importantly, the Treasury Department clarified that the rules apply only to intermediaries that directly interact with customers, not the underlying DeFi protocols themselves. This distinction aims to target user-facing interfaces rather than protocol developers or validators.
The IRS estimates that between 650 and 875 such entities — with a median of about 765 — could be affected, along with approximately two million American taxpayers who use DeFi platforms.
Industry Pushes Back: Lawsuit Challenges IRS DeFi Reporting Rule
In response to the new requirements, major crypto advocacy groups — including the Blockchain Association, DeFi Education Fund, and Texas Blockchain Council — have filed a lawsuit challenging the IRS rule.
Critics argue that the concept of a "broker" does not align with the decentralized nature of DeFi. Unlike traditional finance, where brokers hold assets and facilitate trades, DeFi users retain custody of their digital assets and interact directly via smart contracts.
“There is no broker-like entity in decentralized transactions,” the lawsuit states. “Users self-custody and transact peer-to-peer using open-source software.”
Industry experts warn that enforcing broker-style reporting could impose unreasonable compliance burdens on developers and potentially stifle innovation. Some fear it may even lead to the de facto shutdown of DeFi services accessible to U.S. users.
The case raises fundamental questions about how legacy financial regulations should apply to decentralized systems — a debate likely to shape crypto policy for years to come.
Treasury Finalizes Crypto Broker Tax Reporting Requirements
Alongside the IRS announcement, the U.S. Department of the Treasury has officially finalized tax reporting requirements for specific digital asset brokers under Regulation Identification Number (RIN) 1545-BR39 and Treasury Decision (TD) 10021.
This long-awaited rule was delayed due to strong resistance from the crypto industry, which has long opposed mandatory transaction tracking over privacy and technical feasibility concerns. However, the Biden administration pushed forward, emphasizing transparency and tax compliance.
The finalized rules expand the definition of a "broker" to include entities facilitating digital asset transfers, ensuring more comprehensive tax oversight across centralized and semi-centralized platforms.
Galaxy Research’s 2025 Crypto Outlook: Bitcoin at $185K?
One of the most anticipated analyses this week came from Galaxy Research, which released its comprehensive 2025 forecast for the cryptocurrency market. The predictions cover Bitcoin, Ethereum, DeFi, Layer 2s, institutional adoption, and macro trends.
Key Bitcoin Predictions
- Price Target: Bitcoin could surpass $150,000 in the first half of 2025 and reach **$185,000 by Q4**.
- Institutional Adoption: At least one top-tier wealth management firm will recommend a 2%+ allocation to Bitcoin.
- Corporate & National Holdings: Five Nasdaq-100 companies and five nations may add BTC to their balance sheets or sovereign wealth funds.
- ETP Growth: U.S. spot Bitcoin ETFs could manage over $250 billion in assets by year-end.
- Market Performance: Bitcoin is expected to rank among the top-performing risk-adjusted assets globally.
Bitcoin Network & Mining Trends
- Developers will reach consensus on the next protocol upgrade.
- Over half of the top 20 publicly listed Bitcoin miners will pivot toward AI or high-performance computing partnerships.
- Bitcoin DeFi — measured by BTC locked in DeFi protocols — could nearly double by 2025.
Ethereum and Alt-Layer Forecasts
- Ether (ETH) price may exceed $5,500, with staking participation surpassing 50% of circulating supply.
- The ETH/BTC ratio is projected to start below 0.03 but recover to over 0.06 by year-end.
- Layer 2 networks will generate more economic activity than alternative Layer 1 blockchains combined.
DeFi and Stablecoin Evolution
- DeFi enters a “dividend era,” with protocols distributing over $1 billion in value to users via treasury funds and revenue sharing.
- Chain governance will rebound with experimental models gaining traction.
- The stablecoin supply could double to over $400 billion, with Tether’s dominance falling below 50%.
- Yield-generating alternatives like Blackrock’s BUIDL and Ethena’s USDe will challenge USDC’s position.
Regulatory and Institutional Milestones
- Stablecoin legislation is expected to pass both congressional chambers and be signed into law — possibly by President Trump.
- Market structure legislation remains complex and unlikely to be finalized in 2025.
- The U.S. government won’t buy Bitcoin outright but will explore policies around expanding its existing BTC holdings.
- The SEC is anticipated to investigate Prometheum, the first licensed “special purpose broker-dealer” in crypto.
👉 See how institutional interest is shaping the next bull cycle.
Solana Futures ETF Proposed by VolatilityShares
Adding to the growing momentum around altcoin financial products, VolatilityShares has filed with U.S. regulators to launch a leveraged ETF tied to Solana futures. If approved, this would mark one of the first attempts to bring leveraged exposure to SOL through a regulated fund structure.
Such products signal increasing institutional appetite for diversified crypto derivatives beyond Bitcoin and Ethereum.
Elon Musk Backs Proposal for “Texas Institute of Technology”
In a lighter but notable development, Elon Musk responded positively on X (formerly Twitter) to a proposal by Andreessen Horowitz partner Katherine Boyle to create the “Texas Institute of Technology” (TITS).
Musk replied: “Maybe it’s time.”
He has previously expressed interest in creating a university focused on innovation, science, and real-world problem-solving. His past educational ventures include:
- Ad Astra: A private school for SpaceX employees’ children emphasizing critical thinking and ethics. Closed in 2020.
- Astra Nova: An open-enrollment version of Ad Astra with similar principles. Tuition: $32,500/year.
Notably, Musk once suggested that TITS tuition could be paid in Dogecoin, potentially creating a major real-world use case for the meme coin — which Galaxy Research predicts could hit $1 per coin by 2025.
Frequently Asked Questions
Q: When will the new IRS DeFi reporting rules take effect?
A: The rules are expected to go into effect on or after January 1, 2027.
Q: Does the IRS rule apply to all DeFi protocols?
A: No. It applies only to front-end service providers that directly interact with users, not the underlying decentralized protocols.
Q: Why are crypto groups suing the IRS?
A: They argue that DeFi lacks traditional broker-like intermediaries and that imposing reporting duties contradicts decentralization principles.
Q: Is Bitcoin really going to $185,000 in 2025?
A: Galaxy Research projects this as a potential high-end target based on institutional adoption and macroeconomic trends — though it remains speculative.
Q: Will stablecoin legislation pass in 2025?
A: Galaxy Research believes yes — with bipartisan support expected — though broader market structure laws may not be finalized.
Q: Can I invest in Solana through an ETF now?
A: Not yet. VolatilityShares has only filed a proposal for a leveraged Solana futures ETF; approval is pending.
Core Keywords
Bitcoin price prediction 2025, DeFi regulation, IRS crypto rules, crypto ETF, stablecoin growth, Ethereum staking, institutional crypto adoption
👉 Stay ahead of regulatory changes and market shifts in crypto.