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A well-known nonprofit advocacy group for cryptocurrency, the Blockchain Association, has filed a lawsuit to overturn new reporting regulations for brokers of decentralized financing (DeFi). The group contends that these regulations, which were put in place by the Treasury Department and the Internal Revenue Service (IRS), go beyond the bounds of the law and jeopardize the development of DeFi in the United States.
The IRS and Treasury recently announced that DeFi protocols must adhere to the same reporting standards as securities brokers. This rule mandates the reporting of gross proceeds from digital asset sales, a move the Blockchain Association describes as a blow to the digital assets sector.
Marisa Coppel, the Blockchain Association’s head of legal, criticized the decision, stating, “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.”
Coppel further emphasized the broader implications, noting that the rules infringe on users’ privacy and could push the emerging DeFi technology offshore. She reaffirmed the organization’s commitment to safeguarding decentralized finance, adding, “Blockchain Association continues to stand with the innovators and users of DeFi and will continue to fight this misguided rulemaking to ensure the United States remains a home for decentralized finance technology and developers alike.”
Kristin Smith, CEO of the Blockchain Association, voiced strong opposition to the new rules in a post on the platform X (formerly Twitter). Smith declared that the group’s lawsuit asserts the rulemaking violates the Administrative Procedure Act and is unconstitutional.
“Today we’re taking action, filing a lawsuit that argues today’s broker rulemaking violates the Administrative Procedure Act and is unconstitutional,” said Smith. “We stand with our nation’s innovators and will continue working to ensure the future of crypto – and DeFi – is here in the United States.”
As the legal battle unfolds, the Blockchain Association remains steadfast in its mission to preserve innovation within the U.S. DeFi ecosystem, challenging regulations it views as overreaching and detrimental.