IRS Finalizes Crypto Reporting Rules, Sparking Legal Battle

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Altcoinbuzz2024/12/30 19:44

By:By Victor -Victor -

The IRS has finalized new rules requiring brokers to report digital asset transactions, including those on decentralized exchanges (DeFi)

Starting in 2027, brokers will need to disclose gross proceeds from crypto sales. They must also provide details about the taxpayers involved.

This week, the DeFi Education Fund filed a lawsuit against the Treasury Department and the IRS. They claim the new rules are overreaching and could essentially serve as a crypto ban.

Critics Call IRS Rule Overreach a Threat to Innovation

Joined by the Blockchain Association and the Texas Blockchain Council , the group argues the rules exceed the agencies’ legal authority. This violates the Administrative Procedure Act (APA) and is unconstitutional.

At the heart of the issue is how the IRS defines “brokers.” Under the finalized rules, front-end providers—like those building interfaces for decentralized apps—could be considered brokers. Even developers of unhosted wallet apps might fall under this category. This stretches the common-sense understanding of the term far beyond its historical meaning. Critics argue this could stifle innovation and force developers to shut down operations. They also warn it could put U.S. competitiveness in blockchain technology at risk.

🚨Industry Fights Back on Final “Broker” Rule from IRS🚨

In order to protect DeFi and the digital asset industry more broadly, we sued Treasury and IRS today challenging their doomed rulemaking, which would essentially serve as a DeFi ban.

Along with @BlockchainAssn &… https://t.co/O2kuGak5Zy

— DeFi Education Fund (@fund_defi) December 28, 2024

While the court battle plays out, crypto advocates are urging Congress to intervene using the Congressional Review Act (CRA) . This law allows Congress to overturn federal agency rules by passing a resolution with a simple majority in both houses. The resolution also requires the President’s approval.

Crypto Advocates Urge Action as IRS Rule Looms

The Blockchain Association and others believe this new rule could set a dangerous precedent for overregulation. They’re calling on crypto enthusiasts, developers, and everyday users to contact their members of Congress.

3/ We filed suit in the U.S. District Court for the Northern District of Texas, seeking the following relief:
– A declaratory judgment that the Rule is arbitrary, capricious, or otherwise contrary to law within the meaning of the APA;
– An order vacating and setting aside the…

— DeFi Education Fund (@fund_defi) December 28, 2024

Advocates are pressing lawmakers to act before the rule takes effect in 2027. As the debate heats up, one thing is clear: the crypto industry isn’t going down without a fight.

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