Key Takeaways:
- Legal Challenge to IRS Rules: The Blockchain Association filed a lawsuit against the IRS, claiming its new crypto broker regulations violate the Administrative Procedure Act and infringe on constitutional rights.
- Impact on DeFi: The rules could classify DeFi platforms and smart contract developers as brokers, imposing significant compliance burdens.
- Privacy and Industry Concerns: Critics warn the regulations threaten user privacy and risk driving blockchain innovation offshore, impacting up to 2.6 million U.S. taxpayers.
The Blockchain Association has filed a lawsuit against the U.S. Internal Revenue Service (IRS) challenging new cryptocurrency broker regulations.
Finalized on December 27, these rules require brokers, including decentralized exchanges (DEXs) and other platforms, to report digital asset transactions, gross proceeds, and related taxpayer information.
Today, @BlockchainAssn, @fund_defi, and @TXblockchain_ filed a lawsuit challenging the IRS’ broker rulemaking.
— Blockchain Association (@BlockchainAssn) December 28, 2024
This rule – as the countless comment letters warned – risks crippling the U.S. digital asset sector.https://t.co/D8VsDpNJvW pic.twitter.com/8HDvpIhBHC
These regulations, set to take effect in 2027, aim to broaden compliance requirements across the crypto space.
The Blockchain Association, alongside the Texas Blockchain Council, contends that the rules violate the Administrative Procedure Act and the Constitution.
CEO Kristin Smith emphasized the organization’s commitment to supporting innovators and preserving cryptocurrency and decentralized finance (DeFi) development within the U.S.
Critics, including the Blockchain Association’s Head of Legal, Marisa Coppel, argue that these regulations impose excessive compliance burdens on software developers, particularly those creating DeFi systems, potentially driving innovation offshore.
5/ Mandating the collection of such information raises massive privacy concerns and falls outside the scope of the IRS’s statutory authority. And the IRS did not sufficiently address the risks this rule poses to users, entrepreneurs, and other participants in the DeFi ecosystem.
— Marisa Tashman Coppel (@MTCoppel) December 28, 2024
Concerns also center on privacy, with the expanded “broker” definition seen as infringing on individual rights.
The IRS estimates the rules will impact up to 875 DeFi brokers and 2.6 million taxpayers.
The Blockchain Association views the measures as detrimental to industry growth and has pledged ongoing efforts to protect privacy and innovation in the crypto sector.
About The Author
Adam Morris, the co-founder of Crypto Head and a respected crypto expert, offers insightful commentary and analysis on cryptocurrency, NFTs, and the evolving digital landscape.
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