The Blockchain Association has filed a lawsuit against the United States Internal Revenue Service (IRS) in response to new regulations imposed on cryptocurrency brokers. According to the Association, these regulations exceed the IRS’s statutory authority and violate the Administrative Procedure Act. The IRS recently introduced rules requiring brokers to report digital asset transactions, including front-end platforms such as decentralized exchanges, starting in 2027. These rules mandate brokers to disclose gross proceeds from digital asset sales and taxpayer information.
Kristin Smith, CEO of the Blockchain Association, announced the lawsuit, describing the new rules as unconstitutional and stating that they pose unlawful compliance requirements on software developers involved in building trading infrastructure. The regulations broaden the definition of “broker” to include decentralized finance (DeFi) trading platforms, potentially affecting millions of U.S. taxpayers.
Legal experts argue that the new rules infringe on the privacy rights of DeFi users. They worry that these regulations could push innovation and technology offshore. The IRS estimates that these changes will impact between 650 and 875 DeFi brokers and up to 2.6 million U.S. taxpayers.
