The US Treasury and IRS’s newly issued broker reporting rule has been met with strong opposition from the cryptocurrency industry, with many arguing that it jeopardizes the future of decentralized finance (DeFi) innovation in the United States. Michele Korver, head of regulation at Andreessen Horowitz’s blockchain arm, A16z Crypto, has voiced her concerns, stating that the rule undermines DeFi’s potential to deliver accessible and efficient financial services. Industry leaders are now joining forces to challenge the rule through legal and legislative means.

The Rule in Question

The Treasury’s “Midnight” Reporting Rule, issued on December 30, expands the definition of brokers to include DeFi trading front-ends. However, industry leaders argue that these platforms do not directly facilitate transactions and should not be subject to the same regulations as traditional brokers. The DeFi Education Fund, the Blockchain Association, and the Texas Blockchain Council have filed a lawsuit to block the regulations, citing undue burdens on DeFi entities and violations of the Administrative Procedure Act (APA).

Industry Response

A16z Crypto has pledged to defend the sector through multiple avenues, including legal challenges and legislative advocacy. Korver reassured developers that industry attorneys are working to protect DeFi technology, stating that these efforts are critical to preserving its transformative potential. Other prominent figures in the crypto space, including Jake Chervinsky, Hayden Adams, and Katherine Minarik, have also spoken out against the rule, criticizing its timing, potential impact, and potential to stifle innovation.

Concerns Over Regulatory Overreach

Industry leaders are concerned that the rule represents a deliberate attempt to hinder DeFi innovation and impose unnecessary burdens on DeFi entities. Minarik argued that the rule “races past the plain limits set by Congress” and will produce “far more pointless paperwork than the IRS can handle.” The industry is now rallying together to challenge the rule and protect the future of DeFi in the United States.

Source: Cryptopotato.com

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