In this post:
- The Internal Revenue Service (IRS) has been sued by the Blockchain Association for new rules that target the decentralized finance (DeFi) industry.
- The IRS’s “stifling” requirements were attacked by the legal counsel for the Blockchain Association.
- As trust in the pro-crypto Trump administration continues, the crypto community rallied in denouncing the new IRS regulations.
The Internal Revenue Service (IRS) has been sued by the Blockchain Association for new rules pertaining to the decentralized finance (DeFi) industry. The organization is opposing new IRS regulations that would designate certain DeFi industry protocols as brokers. The protocols will be required by the new regulation to disclose customer transaction details via Know Your Customer (KYC) data.
About 875 DeFi protocols may be impacted by the new rule, according to the IRS, a move that has angered the whole cryptocurrency industry. Any platform that allows traders to purchase and sell assets in the DeFi sector will be regarded as a broker under the new regulation.
The decision is strongly opposed by legal experts who point to multiple infringement of constitutional rights. Additionally, investors are cautious due to the security concerns that the proposed KYC details may present.
A lawsuit is filed by the Blockchain Association to challenge the IRS.
When the IRS first issued its mandate, traders objected to the rules, causing market-wide discontent. The IRS responded to their displeasure by promising to make sure the correct individuals are making timely tax payments.
The Blockchain Association declared that it has filed a lawsuit against the new regulation while the dispute was still raging.
The Blockchain Association announced in a post on X (previously Twitter) that it filed the case alongside the Texas Blockchain Council and the DeFi Education Fund. According to the body, the rule may jeopardize the United States’ thriving digital asset market. Additionally, it stated that the IRS had received many comment letters conveying the same cautions.
Marisa Coppel, the association’s legal chief, claims that the IRS violated people’s rights by classifying the processes as brokers, going beyond its legislative jurisdiction.
Although they do not execute trades, the IRS and Treasury have exceeded their statutory authority by extending the definition of “broker” to encompass providers of DeFi trading front-ends. Not only is this an infringement on the privacy rights of individuals using decentralized technology, it would push this entire, burgeoning technology offshore.”
She noted that the Blockchain Association will continue to stand with users and fight against any form of misguided regulations.
“Blockchain Association continues to stand with innovators and users of DeFi and will continue to fight this misguided rule-making to ensure the United States remains a home for decentralized finance technology and developers alike,” she added.
The IRS Blockchain Association CEO, Kristin Smith, has come under fire from the crypto community. While some prominent figures in the field have expressed their disapproval of the action, others have offered their support.
Smith has strongly opposed some portions of the rules and encouraged the IRS to rescind them. Additionally, she has faith that the next Trump administration would recognize the catastrophic consequences that such a decision may have for the nation’s creativity.
Variant Chief Legal Officer Jake Chervinsky, speaking on behalf of the legal community, expressed his disapproval of the laws, calling them a last-ditch effort by the anti-crypto army. Additionally, he asked the court to reverse the restrictions, stating that the future administration would take action if the court did not.
Some users on X have also called it an intentional move by the Biden administration to sabotage the incoming pro-crypto Trump administration. The crypto community has always come together to criticize regulations that may hinder the growth of the crypto industry. With the incoming pro-crypto Trump administration, there is confidence that laws like these will be rejected outrightly.
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