The US Internal Revenue Service (IRS) and Treasury are being sued by several blockchain trade groups in response to new regulations for crypto brokers.
The Blockchain Association, DeFi Education Fund, and the Texas Blockchain Council have filed the lawsuit in a US District Court in Texas. The lawsuit claims that the newly introduced rules, set to take effect in 2027, are “unconstitutional” and will “cripple the digital asset industry.”
The IRS announced its final regulations on December 27, which require crypto brokers to report digital asset transactions. These rules also extend reporting requirements to decentralized exchanges and other front-end platforms.
In a statement, the groups criticized the US government for disregarding industry feedback, stating that the new regulations impose “unlawful compliance burdens on software developers” and threaten to “stifle innovation and burden American entrepreneurs.” Marisa Coppel, head of legal for the Blockchain Association, noted that the IRS and Treasury have overstepped their statutory authority by including providers of DeFi trading front-ends in the definition of “broker,” even though they do not facilitate transactions.
Coppel emphasized that this expansion infringes on the privacy rights of individuals using decentralized technology and could drive this emerging sector offshore.
Miller Whitehouse-Levine, CEO of the DeFi Education Fund, expressed his disappointment with the decision, highlighting that decentralized finance aims to enhance the accessibility and efficiency of financial services and the digital economy. He stated that the recent rulemaking poses a direct threat to financial innovation and vowed to oppose it using all available resources.