As a seasoned researcher with a keen interest in blockchain technology and its implications for privacy rights, I find myself deeply concerned about the latest regulatory move by the Internal Revenue Service (IRS). The new rules, which require brokers to report digital asset transactions, expand existing reporting requirements to include front-end platforms such as decentralized exchanges (DEXs), are a step too far in my opinion.
As a researcher, I’m actively engaged in the ongoing discourse surrounding digital currencies. Recently, the U.S. Internal Revenue Service (IRS) has proposed new regulations regarding cryptocurrencies. In response to these proposals, I find myself participating in a collective legal action, along with members of the Blockchain Association, to challenge this regulatory move.
By December 27th, the Internal Revenue Service (IRS) has released final guidelines mandating brokers to disclose digital asset transactions. This extends the current reporting obligations to cover front-end platforms like Decentralized Exchanges (DEXs), as well.
As an analyst, I’m preparing for a change taking place in 2027. This change requires me to openly declare the total earnings from the sale of cryptocurrencies and other digital assets. Furthermore, I will need to provide details about the taxpayers who are part of these transactions.
According to Kristin Smith, CEO of the Blockchain Association, both the Blockchain Association and the Texas Blockchain Council have decided to file a legal action against the Internal Revenue Service (IRS), following the implementation of new rules, as stated in a post on December 28th.
“Today we’re taking action, filing a lawsuit that argues today’s broker rulemaking violates the Administrative Procedure Act and is unconstitutional.”
Smith emphasized his support for American inventors in the field of cryptocurrency and Decentralized Finance (DeFi), stating that efforts would be made to secure a domestic future for these technologies,”.
If a Decentralized Finance (DeFi) platform mediates transactions involving digital assets, whether directly or through smart contracts, and holds significant power to manage or guide these processes, it might be considered a broker under the revised regulations.
As an analyst, I would rephrase that statement as follows: “According to the Blockchain Association, software developers constructing front-end trading infrastructure are being forced into illegal compliance by the IRS’ rulemaking.” This maintains the original sentiment while using more natural first-person language.
For blockchain software creators, the choice at hand carries substantial apprehension since past software developers have faced penalties due to misuse of their creations.
Significantly, the developer of Tornado Cash, Alex Pertsev, was convicted of money laundering by Dutch judges at the Court of Appeal in s-Hertogenbosch on May 14. He was given a sentence of five years and four months for supposedly laundering over $1.2 billion in illegal funds, even though Tornado Cash is a non-custodial cryptocurrency tumbler.
IRS’s new regulation is an “infringement” on privacy rights of DeFi users: legal expert
Some legal specialists argue that the IRS’ latest regulations could potentially violate the privacy protections of Decentralized Finance (DeFi) users.
According to Marisa Coppel, Head of Legal at the Blockchain Association, the Internal Revenue Service (IRS) has expanded its definition of “broker” to encompass DeFi trading interfaces. These platforms do not facilitate transactions directly but are now considered brokers under this new definition.
“Not only is this an infringement on the privacy rights of individuals using decentralized technology, it would push this entire, burgeoning technology offshore. Blockchain Association continues to stand with the innovators and users of DeFi, and will continue to fight this misguided rulemaking…”
Starting from 2026, brokers are required to start gathering and submitting the essential data regarding digital asset transactions, as IRS regulations will take effect for such sales starting from 2027.
Based on the IRS’ projections, it is anticipated that approximately 650 to 875 DeFi intermediaries, along with potentially up to 2.6 million American taxpayers, may be impacted by these forthcoming regulations.
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2024-12-28 16:45