The new regulations require decentralized exchanges and other DeFi-related platforms to report all crypto transactions, along with taxpayer details, starting in 2027. This aims to increase transparency in digital asset transactions. Critics argue it oversteps the IRS's statutory authority and violates the Administrative Procedure Act and constitutional principles.
The rule imposes significant compliance burdens on software developers, discouraging innovation and hindering U.S. entrepreneurship. Marisa Coppel of the Blockchain Association claims this expansion infringes on individuals' privacy rights and could drive decentralized technology offshore.
Industry leaders have called for legislative intervention, arguing that the rule, released during the holiday season, was strategic to minimize pushback. Bill Hughes of Consensys and Miles Jennings of a16z Crypto criticized the IRS's move as an overreach threatening DeFi operations.
Alexander Grieve from Paradigm urged Congress to review and potentially reject these new stipulations, with lawmakers like French Hill and Patrick McHenry already expressing opposition. Hill described the rule as an ill-conceived attempt to target DeFi by the outgoing administration.
