The Blockchain Association files a joint lawsuit against the IRS

The Blockchain Association has filed a joint lawsuit against the US Internal Revenue Service (IRS) over its strict regulations affecting the decentralized finance sector. Other plaintiffs in the joint lawsuit include the Texas Blockchain Council and the Decentralized Education Fund. According to the association, the new measures represent an abuse of power by the Revenue Department.

Christine Smith, CEO of the Blockchain Association Announce The lawsuit was filed in a post on X, calling the new IRS regulations “unconstitutional.” She stated: “Today we take action, filing a lawsuit arguing that today’s broker rulemaking violates the Administrative Procedure Act and is unconstitutional.“

This lawsuit comes just two days after the IRS issued its final report on digital asset regulations. New regulations, which are scheduled to come into effect in 2027, make it mandatory for cryptocurrency brokers to report all cryptocurrency transactions made by users on the platforms. This will include Decentralized Exchanges (DEX). In addition, the IRS also requires brokers to share information about taxpayers involved in transactions.

DeFi platforms and developers face tight regulations

with New regulationsthe IRS has classified several DeFi platforms that provide digital asset transactions through smart contracts as intermediaries. This simply means that the revenue entity requires DeFi platforms to follow all the rules that traditional brokers adhere to. This includes sharing Know Your Customer (KYC) documents with the IRS.

The Blockchain Association condemned the IRS’s definition of “intermediaries” while expressing concerns about abuse Decentralized finance Privacy rights of users. According to Marissa Koppel, chief legal officer at the Blockchain Association, the new measures may force these users to carry out their activities elsewhere.

“Not only is this a violation of the privacy rights of individuals using decentralized technology, it will push this entire booming technology offshore.” Merissa stated Referring to the new IRS definition of an intermediary. Merissa also added that the Blockchain Association will continue to stand with innovators and DeFi users in fighting the IRS’s misleading rules.

Impact of new IRS rules

New IRS regulations will impact many DeFi companies. According to Department of the Treasury and the IRS For example, between 650 and 875 DeFi brokers will be affected by the regulatory changes. The two also estimated that the new rules would affect approximately 2.625 million customers.

On the other hand, the IRS is mandating that brokers start collecting data they will use in reports in 2027, starting in 2026. However, this may change as many legal experts have urged the court or the Trump administration to reverse the decision.

While the development of the lawsuit is still unknown, Crypto industry This case is considered a pioneer of change in digital asset regulations. The lawsuit could help shape the relationship between the DeFi industry and regulators.