GRIFFAIN (griffain) 
US Blockchain Advocacy Groups File Lawsuit Against IRS Over DeFi Reporting Requirements
The Blockchain Association, DeFi Education Fund, and Texas Blockchain Council have jointly filed a lawsuit in the U.S. District Court for the Northern District of Texas, challenging the Internal Revenue Service’s (IRS) new broker reporting requirements. The lawsuit claims that the rules could severely impact the U.S. digital asset sector, particularly decentralized finance (DeFi).
Claims of Regulatory Overreach
The organizations argue that the IRS and Treasury Department’s final “broker” rulemaking exceeds their authority. The lawsuit specifically targets the rule’s expansion of the “broker” definition to include providers of DeFi trading front-end services, despite these entities not directly facilitating transactions.
According to the Blockchain Association’s CEO, Kristin Smith, the broker rule is “unconstitutional” and violates the Administrative Procedure Act. Smith stated,
Today we’re taking action, filing a lawsuit that argues today’s broker rulemaking violates the Administrative Procedure Act and is unconstitutional. We stand with our nation’s innovators and will continue working to ensure the future of crypto – and DeFi – is here in the United States.
Consequences of the Rule
The Blockchain Association’s Head of Legal, Marisa Coppel, warns that this overreach “would push this entire, burgeoning technology offshore” while infringing on the privacy rights of individuals using decentralized technology.
DeFi Education Fund CEO Miller Whitehouse-Levine expressed strong disappointment in the timing and scope of the regulation, calling it “midnight rulemaking” that threatens financial innovation. The organization emphasized DeFi’s potential to make financial services more accessible, efficient, and consumer-focused.
Compliance Challenges
Texas Blockchain Council President Lee Bratcher highlighted the practical impossibility of compliance, stating that many actors in the decentralized ecosystem simply cannot access the information now required by the IRS. Bratcher warned that “this regulatory overreach risks driving critical development overseas, threatening US competitiveness in the digital economy.”
The lawsuit comes after numerous stakeholders warned during the public comment period about the potential negative impacts on the digital asset industry. The organizations are taking a strong stance against the IRS’s policies, which they believe could have far-reaching consequences for the future of cryptocurrency and DeFi in the United States.
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