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Blockchain groups sue US IRS over new DeFi regulations
Blockchain groups sue the IRS over new DeFi regulations
Headline
Blockchain groups sue the IRS over new DeFi regulations
Context
A coalition of blockchain organizations, including the Blockchain Association , DeFi Education Fund, and the Texas Blockchain Council, has launched legal action against the U.S. Internal Revenue Service (IRS) and the Department of the Treasury over newly introduced regulations for crypto brokers. The regulations, finalized on December 27, 2023, will require crypto brokers to report digital asset transactions. In addition, decentralized exchanges (DeFi platforms) and other front-end platforms will also be subject to reporting requirements starting in 2027.
Evidence
Pending intelligence enrichment.
Analysis
According to the lawsuit, the blockchain groups argue that these new rules, which expand the definition of “broker” to include DeFi platforms, are “unconstitutional” and will severely harm the digital asset industry. The groups assert that the expanded reporting requirements will place significant compliance burdens on software developers and limit innovation. Marisa Coppel, Head of Legal at the Blockchain Association, emphasized that this move goes beyond the IRS’s statutory authority, as these platforms do not directly facilitate transactions. The plaintiffs contend that the rules could push DeFi innovation out of the United States, causing a shift of digital asset development and operations to jurisdictions with less stringent regulations. In addition to violating privacy rights, the regulations, according to the groups, would burden American entrepreneurs and hinder the growth of a rapidly evolving sector. The DeFi Education Fund’s CEO, Miller Whitehouse-Levine, voiced his disappointment, calling the rulemaking a direct threat to the future of financial innovation.
Key Points
- Blockchain trade groups have filed a lawsuit against the IRS over new rules requiring crypto brokers to report digital asset transactions.
- The lawsuit argues that the new regulations are unconstitutional and could stifle innovation in decentralized finance (DeFi).
Actions
Pending intelligence enrichment.
