The Blockchain Association, the DeFi Education Fund, and the Texas Blockchain Council have filed a lawsuit challenging the recently finalized IRS rule that would require certain decentralized finance (DeFi) brokers to store users' personal information and transaction history. and report to the agency. In 2027
The finalization of the law was controversial It faced widespread criticism from crypto industry experts, who argue that the rule places an undue burden on some DeFi protocols to collect, protect and report users' sensitive personal information, even when it's unclear what entity is performing those functions.
“This not only violates the privacy rights of people who use decentralized technology, but it pushes this entire growing technology out of the country.” said Marissa Koppel, top lawyer in the blockchain community.
particle for direct object Lawsuit It claims that the nature of DeFi should exempt the protocols from the reporting requirement, and that imposing the rule would be a legal overreach that could “effectively end the DeFi industry.”
“Unlike[traditional finance]DeFi does not rely on intermediaries such as brokers,” the lawsuit argues. Instead, users hold their digital assets and transact directly with each other using the software. “There is simply no brokerage involved in a decentralized transaction.”
IRS' The final rule Responds to some of the comments left by industry figures, arguing that reporting requirements “…will benefit tax compliance by helping to bridge the information gap regarding digital assets.” The rule is a result of changes to broker reporting regulations made by the Infrastructure Investment and Jobs Act of 2021. It was proposed for the first time In August 2023
“This regulatory overreach is driving critical development overseas and threatening U.S. competitiveness in the digital economy,” said Lee Bratcher, president of the Texas Blockchain Council.
According to the IRS's own estimate, along with a rough estimate of about 2 million US taxpayers, the rule could affect “approximately 650 to 875 DeFi brokers, with an average of about 765 DeFi brokers.”
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