2/ This rule requires providers of “trading front-end services,” which would include providers of DeFi front-ends and wallet software with trading features, to comply with tax laws relating to broker-dealers – i.e. that these participants must provide 1099s.
– Marisa Tashman Coppel (@MTCoppel) December 28, 2024
4/ These software providers will have to collect and report transaction data and personal information. These providers are not traditional intermediaries and they do not have “clients” like brokers.
– Marisa Tashman Coppel (@MTCoppel) December 28, 2024
6/ DeFi allows users to participate in a fairer financial system. But the government is now forcing middlemen where none exist, creating more risks and more opportunities for inequity. We must protect DeFi technology, not destroy it.
– Marisa Tashman Coppel (@MTCoppel) December 28, 2024
8/ We hope that the court will accept and repeal this rule.
(END)
– Marisa Tashman Coppel (@MTCoppel) December 28, 2024
On December 27, 2024, the DeFi Education Fund, the Blockchain Association, and the Texas Blockchain Council filed a complaint in the U.S. District Court for the Northern District of Texas, challenging the final decision of the Internal Revenue Service (“IRS”) and of the Department of the Treasury. broker-dealer midnight rulemaking, on the grounds that rulemaking exceeds the agencies’ statutory authority, violates the Administrative Procedure Act (“APA”), and is unconstitutional.
During the comment period on the rule, the public warned the IRS and Treasury that adoption of the rule would cripple the digital assets industry. But the government ignored those comments, leaving the digital assets industry with a rule that imposes illegal compliance burdens on software developers who create so-called “trading front-end services.” This midnight rule will stifle innovation and burden America’s entrepreneurs – if it stands.
“The IRS and Treasury have gone beyond their statutory authority by expanding the definition of ‘broker’ to include providers of DeFi trading interfaces even if they do not conduct transactions,” said Marisa Coppel , legal officer of the Blockchain Association. “Not only is this a violation of the privacy rights of individuals using decentralized technology, but it would also push all of this booming technology overseas. The Blockchain Association continues to support DeFi innovators and users and will continue to fight this misguided regulation to ensure the United States remains a hotbed for decentralized financial technology and developers.
“We are incredibly disappointed by today’s decision by Treasury and the IRS to finalize the ill-advised and unfairly sweeping DeFi portion of their “broker-dealer” regulations in an end-of-year “midnight regulation” ” said Miller Whitehouse-Levine, CEO. , DeFi Education Fund. “Decentralized finance promises to make financial services and the digital economy more accessible, efficient, interoperable, reliable and consumer-focused – this promise is at the heart of our work at the DeFi Education Fund. This unfortunate regulation poses a direct threat to financial innovation, and we intend to combat it using every tool at our disposal.
“The new IRS broker-dealer rule places unrealistic expectations on the digital asset ecosystem,” said Lee Bratcher, president of the Texas Blockchain Council. “The rule fails to recognize the decentralized nature of this technology, where many players simply do not have access to the information that the IRS now requires. This excessive regulation risks leading to critical development overseas, threatening U.S. competitiveness in the digital economy.
Source: Blockchain Association
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