The Internal Revenue Services (IRS) and the United States Treasury are facing lawsuits from a number of blockchain trade groups over newly introduced rules for crypto brokers.
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The Blockchain Association, the DeFi Education Fund and the Blockchain Council of Texas filed suit in a U.S. district court in Texas.
According to the filing, the rules, which are expected to take effect in 2027, are “unconstitutional” and “will cripple the digital assets industry.”
The IRS released its final regulations on December 27, rules that will require crypto brokers to report digital asset transactions and will also expand reporting requirements to include decentralized exchanges and other front-end platforms.
In a press release, the trio of blockchain groups have accused the US government of ignoring industry feedback and leaving the digital assets sector with a rule that imposes “unlawful compliance burdens on software developers” and will “stifle innovation and burden American entrepreneurs.
“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,” Marisa said Coppel, legal manager of the Blockchain Association.
“Not only is this a violation of the privacy rights of individuals using decentralized technology, it would push all of this booming technology overseas.”
Meanwhile, DeFi Education Fund CEO Miller Whitehouse-Levine said he was “incredibly disappointed” with the decision.
“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.
