Three crypto industry groups — the DeFi Education Fund, the Blockchain Association, and the Texas Blockchain Council — are suing the Internal Revenue Service to block new regulations that require decentralized finance (DeFi) entities to report customer information.
The IRS has been finalizing crypto tax regulations as part of the Biden Administration’s Infrastructure Investment and Jobs Act. The IRS says these new rules should help “close the information gap with respect to digital assets.”
The lawsuit, on the other hand, claims that this approach would unduly burden “DeFi trading front-ends,” — basically, online platforms that allow users to access crypto protocols but don’t necessarily “effectuate transactions” themselves. The suit argues against defining these front-ends as brokers, in part because “there is simply no broker-like entity involved in a decentralized transaction.”
The Blockchain Association’s head of legal Marisa Coppel said in a statement that the new rules are “an infringement on the privacy rights of individuals using decentralized technology” and would also “push this entire, burgeoning technology offshore.”
