Three major cryptocurrency groups—the Blockchain Association, DeFi Education Fund, and Texas Blockchain Council—are suing the IRS over its new rules impacting decentralized finance (DeFi) platforms.
New IRS DeFi Rules
The IRS has updated its definition of "broker" to include decentralized exchanges and front-end platforms. These platforms are now required to report all cryptocurrency transactions and user details. The rules are set to start in 2027 and aim to make digital asset trading more transparent.
Criticism and Legal Concerns
Critics argue that this interpretation goes beyond the scope of the IRS's authority and violates the rules set by the Administrative Procedure Act (APA). The advocacy groups say these rules create heavy compliance demands, particularly for software developers creating DeFi trading interfaces.
Crypto Community Opinion
The wider crypto community has shown clear disapproval. Bill Hughes, a lawyer at Consensys, noted that the timing of the regulation's announcement seemed aimed at reducing public opposition. Miles Jennings, General Counsel at a16z Crypto, called the regulation a strong effort to limit DeFi's growth.
The legal battle between crypto groups and the IRS highlights the growing tension between innovation in digital assets and governmental regulation. The future of DeFi will hinge on the outcome of these discussions.
