DeFi Education Fund Takes Legal Action Against IRS Over Controversial Tax Rules
The DeFi Education Fund, a prominent advocate for the crypto industry, has filed a lawsuit against the U.S. IRS just one day after the agency unveiled its contentious new tax framework.
While the IRS claimed the regulations had been finalized months ago, the DeFi Education Fund described the rulemaking process as rushed and accused the IRS of overstepping its legal authority in its demands from decentralized finance (DeFi) platforms.
The core of the lawsuit is a challenge against the new tax rules, which the Fund argues violate the Administrative Procedure Act (APA). The Fund pointed out that during the public comment period, concerns were raised about the potential harm these regulations would cause, particularly in terms of the undue burden they would place on software developers. The rules, which require DeFi platforms to collect and report transaction details for IRS review, are seen as an excessive compliance hurdle for developers who build trading front-end services.
According to the DeFi Education Fund, the regulation threatens to stifle innovation and impose significant obstacles on American entrepreneurs. The new tax provisions would mandate that trading service providers track user transactions and submit the information to the IRS, with users also required to fill out Form 1099 for tax reporting.
READ MORE: MicroStrategy to Refine Fundraising Strategy with Focus on Leverage and Bitcoin Treasury
Legal experts, including Bill Hughes from ConsenSys, had previously warned that such a rule would likely lead to legal challenges, and the current lawsuit appears to be the first of many. As the legal battle progresses, more industry stakeholders are joining the call for reform.
The broader crypto community has long been critical of the IRS’s stance on various tax matters. Recent controversies include the agency’s decision to classify crypto staking rewards as taxable upon receipt, which was highlighted in a lawsuit filed by Joshua Jarrett. Privacy concerns related to other IRS tax policies have also been raised by groups like the Digital Chamber.
With key lawsuits against the IRS now in motion, all eyes are on Treasury Secretary nominee Scott Bessent to see if the new administration will move to overturn or modify these regulations.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
