IRS Finalizes Crypto Reporting Rules, Sparking Legal Battle

Starting in 2027, brokers will need to disclose gross proceeds from crypto sales. They must also provide details about the taxpayers involved.

This week, the DeFi Education Fund filed a lawsuit against the Treasury Department and the IRS. They claim the new rules are overreaching and could essentially serve as a crypto ban.

Critics Call IRS Rule Overreach a Threat to Innovation

Joined by the Blockchain Association and the Texas Blockchain Council, the group argues the rules exceed the agencies’ legal authority. This violates the Administrative Procedure Act (APA) and is unconstitutional.

At the heart of the issue is how the IRS defines “brokers.” Under the finalized rules, front-end providers—like those building interfaces for decentralized apps—could be considered brokers. Even developers of unhosted wallet apps might fall under this category. This stretches the common-sense understanding of the term far beyond its historical meaning. Critics argue this could stifle innovation and force developers to shut down operations. They also warn it could put U.S. competitiveness in blockchain technology at risk.

While the court battle plays out, crypto advocates are urging Congress to intervene using the Congressional Review Act (CRA). This law allows Congress to overturn federal agency rules by passing a resolution with a simple majority in both houses. The resolution also requires the President’s approval.

Crypto Advocates Urge Action as IRS Rule Looms

The Blockchain Association and others believe this new rule could set a dangerous precedent for overregulation. They’re calling on crypto enthusiasts, developers, and everyday users to contact their members of Congress.

Advocates are pressing lawmakers to act before the rule takes effect in 2027. As the debate heats up, one thing is clear: the crypto industry isn’t going down without a fight.

Disclaimer

The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted levels of risk tolerance of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.

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