Crypto Industry Groups Sue IRS Over Broker Reporting Rule: A Deep Dive

Crypto Industry Groups Sue IRS Over Broker Reporting Rule: A Deep Dive

The crypto industry is locked in a legal battle with the Internal Revenue Service (IRS) over new regulations that mandate decentralized finance (DeFi) entities to report customer information. This clash underscores the growing tension between the government's desire to regulate the burgeoning crypto market and the industry's emphasis on decentralization and user privacy. The Genesis of the Conflict The dispute stems from the Biden Administration's Infrastructure Investment and Jobs Act, which mandated the IRS to implement stricter reporting requirements for digital assets. The IRS, citing the need to "close the information gap with respect to digital assets," issued regulations that effectively classify many DeFi entities as "brokers." This classification has significant implications. Under the current tax code, brokers are required to report information about their customers' transactions to the IRS. This includes details such as the customer's na…