The Blockchain Association is suing the IRS over new DeFi regulations

Recently, the US Internal Revenue Service (IRS). Announce New regulations that classify certain Decentralized finance DeFi protocols as intermediaries. This step requires these protocols to disclose Know Your Customer (KYC) information for digital asset transactions. The IRS estimates that up to 875 DeFi brokers could be affected by these new rules, which quickly led to a backlash from the community.

In simple terms, the new rules state that some DeFi platforms, which help people buy and sell digital assets, will now be treated like intermediaries. Moreover, the proposed KYC details create security issues in the mind of the investor and legal experts strongly object to this move considering it to be a constitutional violation. In response, the IRS said this would help make sure people are paying the correct taxes. However, many people in the cryptocurrency world are concerned about these new requirements.

Lawsuit filed to counter IRS rule

Instead of arguing, the Blockchain Association, in collaboration with the Decentralized Education Fund and the Texas Blockchain Council, filed a lawsuit against the IRS, challenging the new regulations.

Christine Smith, CEO of the Blockchain Association, expressed her strong opposition,

Demanding that the rules be reversed. She hopes that Trump’s pro-crypto Congress and administration understand the complexities of such communication that suppresses innovation.

Furthermore, the legal community is also unhappy with the laws, with Jake Chervinsky, chief legal officer at Variant, calling the rule “the last gasp of the anti-crypto army” and urging it to be struck down either by the courts or the new administration. .

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Adding fuel to the sentiment, Miles Jennings, general counsel for a16z Crypto, criticized the rule as an overreach, calling it a “fantastic expansion” of the term “transaction completion.” He warned that the new rules could allow the IRS to regulate or even ban DeFi platforms.

Some X users see it as a subversive plan by Biden to block Trump’s cryptocurrency plans.

The community is united in objecting to this law, which may violate its constitutional rights. Since Trump takes over in January with his pro-crypto team, it will be interesting to see how anti-crypto rules will be handled by Congress.