The IRS’s new crypto rule has been given the cold shoulder, and honestly, it’s not hard to see why. The rule mandates that digital asset middlemen report user transaction data, including gross proceeds from crypto sales. Sounds reasonable, right? Wrong. Critics are up in arms. The IRS is accused of overstepping its statutory authority by redefining “broker” to include decentralized entities that Congress specifically excluded. Oops!
The IRS’s new crypto rule? A regulatory overreach that’s ruffling feathers across the DeFi landscape.
Public comments flooded in during the rulemaking process, and guess what? Most pointed out the negative impacts on decentralized finance (DeFi). But did the IRS listen? Nope. They turned a blind eye to legitimate concerns about privacy and compliance. Can you say “vague” and “overreaching”? The Fourth and Fifth Amendments are getting a workout here, with allegations of warrantless searches and due process violations. Talk about a mess.
Implementation is no walk in the park either. Imagine generating 8 billion new information returns annually. Yikes! Compliance costs are pegged at a staggering $260 billion, way more than the $10 billion tax gap the rule is supposed to fix. IRS estimates indicate that good luck modifying DeFi platforms to collect user data. With no intermediaries in DeFi, how do they even expect this to work? It’s like trying to fit a square peg in a round hole. The resolution to rescind the IRS DeFi broker rule has advanced from the Ways and Means Committee to the House of Representatives, showcasing growing legislative pushback.
The industry isn’t taking this lying down. Organizations like the Blockchain Association are fighting back, and they’re not alone. Lawmakers are stepping in, pushing to repeal this regulatory nightmare. The House Ways and Means Committee has already voted in favor of overturning the rule.
Next, a full House vote looms, along with potential Senate action.
With all this chaos, it’s clear that DeFi has just dodged a massive regulatory bullet. The IRS’s crypto rule? More like a giant headache.
