The IRS released new regulations on Friday, requiring DeFi brokers to submit reports starting in 2027, including total revenue and details of both parties involved in transactions, which has sparked widespread backlash in the industry. Michele Korver, regulatory chief at a16z crypto, publicly supported organizations like the Blockchain Association in filing a lawsuit against the IRS, alleging that the regulation oversteps authority, violates the Administrative Procedure Act, and is unconstitutional. (Background: Is there still room for maneuver after the Biden administration's final blow to the DeFi industry?) (Supplementary Background: DEXs must implement KYC! The IRS pushes for digital asset transaction tax laws, facing fierce backlash from the crypto industry.) The U.S. Treasury and the IRS released the final version of the regulation on Friday (27), which will require "decentralized finance (DeFi) brokers" to report the total revenue from digital asset sales starting January 1, 2027, as part of a crackdown on cryptocurrency tax evasion. The new regulations require all future DeFi brokers to submit information reports (such as Form 1099-B) to the IRS, which should include the following information: Total Revenue: The total revenue amount from digital asset transactions. Information on Both Parties: Basic information including identity and address. Transaction Details: The transfer price of the asset and the underlying cost must be recorded. This means that this regulation imposes strict Know Your Customer (KYC) requirements on DeFi providers. a16z supports suing the IRS After the new rules were announced, there was widespread criticism within the crypto industry, claiming that the regulation requiring "DeFi to implement KYC" stifles the spirit of DeFi, and many organizations have filed lawsuits against the IRS. Michele Korver, regulatory chief at a16z crypto, posted on the X platform last night in support of legal action, stating: We at a16z crypto firmly believe that DeFi will make financial services and the digital economy more accessible, efficient, interoperable, reliable, and truly consumer-focused. However, yesterday the Treasury issued a "midnight broker reporting rule," which seriously threatens the future promised by DeFi and undermines the prospects for DeFi innovation in the U.S. Michele Korver further expressed her support for DeFi builders and pointed out the illegality of this new regulation: This threat needs to be addressed immediately, which is why we support the civil lawsuit brought against the Treasury, Yellen, and the IRS by the DeFi Education Fund, Blockchain Association, and Texas Blockchain Council, challenging this doomed-to-fail rule. We believe this final rule exceeds the Treasury's legal authority, violates the Administrative Procedure Act (APA), and is unconstitutional. DeFi builders should trust that industry lawyers are working hard to protect this technology. We will continue to fight across various fronts—both in court and with the help of Congress and the incoming administration. We @a16zcrypto believe that DeFi will make financial services and the digital economy more accessible, efficient, interoperable, dependable, and consumer-focused. However, yesterday, the @USTreasury issued a “midnight” broker reporting rulemaking that is a direct threat to that… — Michele Korver (@MicheleKorver) December 29, 2024 The crypto industry strongly rebounded Several industry executives have voiced criticism on social media, with Miles Jennings, general counsel at a16z Crypto, tweeting on Saturday that the IRS has significantly expanded its interpretation by misrepresenting the meaning of "realized transactions" to prohibit the development of DeFi. This ignores court rulings (such as those involving Uniswap, Coinbase, etc.) that have already determined that non-custodial DeFi front-ends do not constitute "realized transactions." This rule should be swiftly repealed, and those who continue to push this reckless legal battle should be held accountable. Consensys' global head of regulatory affairs: There is room for maneuver Although the new regulations have been finalized, their future implementation is not set in stone. According to procedures, the new rules may face congressional review, especially after the new Congress members take office, possessing the power to reassess and veto, as there have been successful cases in the past, such as this year's congressional vote to veto the SAB 121 rule regarding digital asset accounting. Bill Hughes, global head of regulatory affairs at Consensys, the parent company of Metamask, criticized the timing of the new rule's release on the X platform and explained: First, a lawsuit will be filed, claiming that the rule exceeds the Treasury's authority and violates the Administrative Procedure Act (APA). Subsequently, the rule may enter congressional review, where Congress can veto it, just like the vote on SAB 121 this year. The outgoing government is not leaving quietly; the struggle continues. Jake Chervinsky, general counsel at the venture capital firm Variant, also stated: "This illegal rule is the dying gasp of the anti-crypto forces as they lose power. It must be overturned by the courts or the incoming government." Related Reports: IRS New Rule: What Impact Will Tax Reporting on Cryptocurrency and Stablecoin Transactions Have? Does DeFi Also Need KYC? IRS Releases Draft Digital Asset Tax Form, Experts Warn of Major Privacy and Security Issues. Strict Crackdown on Cryptocurrency Tax Evasion! IRS Proposes New Rules, Messari CEO Criticizes: Biden Administration Will "Hinder Crypto Innovation" "The IRS Requires DEXs to Implement KYC, a16z Supports Lawsuit: Overstepping Authority and Unconstitutional, Seriously Threatening the Future of the DeFi Industry" This article was originally published in BlockTempo (the most influential blockchain news media).