IRS and Treasury Are Facing Legal Action Over New Rules For Crypto Brokers
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The US Treasury and the Internal Revenue Service (IRS) are facing legal action from multiple blockchain trade groups over the recently introduced rules involving cryptocurrency brokers.
Recently, the Treasury and the IRS released new rules that did not sit well with the crypto world, causing a group of them to file lawsuits. So far, the Blockchain Association, DeFi Education Fund, and the Texas Blockchain Council have all decided to sue the pair in a US District Court in Texas.
The filing claims that the rules, which are scheduled to come into effect in 2027, are unconstitutional. It further claims that they will completely cripple the digital asset industry.
The rules in question were issued on December 27, and they will require crypto brokers to report digital asset transactions. They will also extend reporting requirements to include DEXes and other front-end platforms, including DeFi platforms, but not DeFi apps — only services that facilitate crypto transfers.
Blockchain Groups Intend To Fight The Decision
The three blockchain groups responded by accusing the US government of ignoring industry feedback and pushing a rule that would put unlawful compliance burdens on software developers, thus damaging the digital asset sector. They also argued that the rules would stifle innovation and burden American entrepreneurs.
The Blockchain Association’s head of legal, Marisa Coppel, said that both the IRS and the Treasury have overstepped their statutory authority in expanding the definition of broker, seeking to include DeFi trading front-ends, despite the fact that they do not effectuate transactions.
She added that this goes beyond an infringement on the privacy rights of individuals, but it also pushes this entire burgeoning technology offshore.
The DeFi Education Fund’s CEO, Miller Whitehouse-Levine, also commented on the situation, expressing “incredible disappointment” with the decision made by the two agencies.
He argued that the DeFi sector promises to make financial services and the digital economy more accessible, efficient, dependable, interoperable, and consumer-focused. Not only that, but he stressed that this very promise is at the heart of the DeFi Education Fund, and it shapes its work.
However, the “unfortunate” rulemaking made by the IRS and the Treasury represents a direct threat to financial innovation, as he argued. As a result, both his organization and the other two intend to fight it with every tool at their disposal.
