IRS Sparks Backlash With New DeFi Reporting Regulations
Three well-known pro-cryptocurrency groups – Blockchain Association, Decentralized Finance The Education Foundation and the Texas Blockchain Commission have filed legal action against the Internal Revenue Service (IRS).
The lawsuit challenges the IRS and Treasury Department’s recent decision to classify decentralized finance (DeFi) platforms as brokers, a ruling that has sparked significant controversy in the cryptocurrency space.
IRS Broker Redefinition Raises Legal, Legislative Questions
December 27, IRS finalizes new rules Targeting the DeFi industry, expanding the definition of brokers to include Decentralized exchange and other front-end platforms.
The change requires these entities to report all cryptocurrency and other digital asset transactions, including detailed information about taxpayers. The regulations will be implemented starting in 2027 and are intended to increase transparency in digital asset transactions.
However, Cryptocurrency advocacy groups Question IRS’s extension of broker status to DeFi Platform Exceed the statutory authority vested in the agency. They also believe the move violates the Administrative Procedure Act (APA) and is unconstitutional.
Additionally, they believe the rule places an undue compliance burden on software developers, particularly those who create transaction interfaces. They believe this could seriously inhibit innovation and put enormous pressure on American entrepreneurs.
“The IRS and Treasury Department have exceeded their statutory authority by expanding the definition of ‘broker’ to include DeFi transaction front-end providers, even though they do not execute transactions. This not only infringes on the rights of individuals using decentralized technology Privacy will also push the entire emerging technology overseas,” said Marisa Coppel, legal director of the Blockchain Association. explain.
Meanwhile, the regulatory changes have also prompted a backlash from the broader cryptocurrency community, with some industry leaders calling for legislative intervention.
Bill Hughes is an attorney at Consensys, critical The rule, issued during the holidays, is a strategic move to reduce industry resistance. Likewise, Miles Jennings, general counsel at a16z Crypto descriptive The rule is a gross overreach and is intended to suppress DeFi operations.
Additionally, Paradigm Vice President of Government Affairs Alexander Grieve urge The upcoming Congress will reassess and possibly reject these new regulations.
U.S. lawmakers love French Hill Patrick McHenry has spoken out against the move, saying They may object.
“The Biden-Harris Treasury Department chose to finalize its controversial broker tax reporting rule today to defy Democrats and Republicans in Congress. This rule is an overreach by the Treasury Department and a blatant and calculated attempt to target DeFi , should never have been finalized in the final days of the Biden-Harris administration,” Hill point out.
Disclaimer
follow trust project BeInCrypto is committed to fair and transparent reporting. This news article is designed to provide accurate and timely information. However, readers are advised to independently verify the facts and consult a professional before making any decisions based on the content of this article. Please note that our terms and Conditions, privacy policyand Disclaimer Updated.
