Crypto Groups Challenge IRS Over New Reporting Rules
In a significant move, three prominent crypto industry groups — the DeFi Education Fund, the Blockchain Association, and the Texas Blockchain Council — have filed a lawsuit against the Internal Revenue Service (IRS). The goal? To prevent the implementation of new regulations that require decentralized finance (DeFi) platforms to report customer information.
The IRS has been working on these crypto tax regulations as part of the Biden Administration’s Infrastructure Investment and Jobs Act. They claim these rules are essential to “close the information gap with respect to digital assets.” However, the lawsuit argues that this approach could impose unnecessary burdens on “DeFi trading front-ends.” These are online platforms that provide users with access to crypto protocols, but don’t actually conduct transactions themselves.
The core of the dispute lies in whether these platforms should be classified as brokers. The lawsuit contends that defining them as such is inappropriate because “there is simply no broker-like entity involved in a decentralized transaction.”
“The new rules are an infringement on the privacy rights of individuals using decentralized technology,” said Marisa Coppel, head of legal at the Blockchain Association. She added that these regulations could potentially “push this entire, burgeoning technology offshore.”
Marisa Coppel, Blockchain Association
- IRS aims to close information gaps with new regulations.
- Lawsuit highlights undue burdens on DeFi platforms.
- Privacy rights and technological innovation at stake.
This legal battle marks a pivotal moment for the crypto industry, as it navigates the fine line between regulation and innovation. It’s a story that will undoubtedly evolve, influencing how decentralized technologies develop and operate in the future.
