Ripple’s Former CTO Reveals Loopholes in DeFi Tax Rules

• David Schwartz performed an experiment to test the current DeFi tax rules.
• Schwartz’s experiment led to several unanswered questions based on current tax laws.
• Meme coin volatility represents one of the major concerns in achieving definite regulation.

Former Ripple CTO David Schwartz has highlighted some of the downsides of DeFi tax laws, following an experiment he performed using XRP and FUZZY, a community-driven meme coin on the XRP Ledger.

Schwartz’s DeFi Experiment

According to Schwartz, he made a two-sided deposit using both crypto tokens in the XRP/FUZZY AMM. The idea was to add liquidity to FUZZY and let him profit from both volatility and swaps between FUZZY and XRP.

The exercise drew several questions from Schwartz, which he found complex to address, particularly based on the existing crypto tax regime. Some of the issues Schwartz sought to addre…

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