The Blockchain Association, the Defi Education Fund, and the Texas Blockchain Council are preparing to fight back against the recently finalized so-called crypto ‘broker’ rules issued by the Treasury and the IRS. The coalition asserts that these rules are unconstitutional and represent regulatory overreach by these agencies.
Crypto Coalition Files Lawsuit to Push Against IRS ‘Midnight’ Broker Rulemaking
Three crypto-supporting organizations have joined forces to oppose Internal Revenue Service (IRS) rules that they think will stifle and bring down the cryptocurrency industry in the U.S. The Blockchain Association, the Defi Education Fund, and the Texas Blockchain Council have filed a joint lawsuit that seeks to vacate the recently finalized “broker” rulemaking issued by the Treasury and the IRS.
The joint organization filed this lawsuit in the U.S. District Court for the Northern District of Texas arguing that the rulemaking is unconstitutional and constitutes an overreach of these agencies’ authority. Specifically, the coalition claims that the actions by the IRS violate the Administrative Procedure Act (“APA”).
The sweeping rules of the IRS include decentralized finance applications and even wallet providers that facilitate exchange transactions and brokers, assigning compliance requirements similar to those fulfilled by centralized exchange institutions. These would become effective by 2027, potentially changing the crypto landscape in the U.S.
The Blockchain Association remarked that the public fought this course of action vigorously during the public commentary period, criticizing the crippling effect of these on the industry.
Marisa Coppel, head of legal at Blockchain Association, explained the gravity of the situation if these measures are allowed to be applied to the wider crypto landscape. She stated:
The IRS and Treasury have gone beyond their statutory authority in expanding the definition of “broker” to include providers of Defi trading front-ends even though they do not effectuate transactions. Not only is this an infringement on the privacy rights of individuals using decentralized technology, it would push this entire, burgeoning technology offshore.
The rules have inspired universal rejection across crypto industry representatives, who had predicted before that a lawsuit would be filed in opposition. Bill Hughes, Senior Counsel at Consensys, stated earlier that this rulemaking would come into Congress’ oversight, where it can be vacated during President-Elect Trump’s administration.
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