Uniswap’s chief legal officer said the IRS’s DeFi broker rule “must be seriously challenged,” with Consensys lawyers saying the ruling was issued “on the last Friday of 2024, during the holidays.”
Cryptocurrency regulators and legal experts have expressed doubts about the long-term viability of the new U.S. Internal Revenue Service (IRS) rules that require decentralized exchanges to meet the same reporting requirements as traditional brokers.
“There are no shortage of ways to challenge this, and it should be seriously challenged,” Katherine Minarik, chief legal officer of cryptocurrency exchange Uniswap, said in a Dec. 27 post.
Regulators want the ruling overturned
“So all sorts of technology inside and outside the industry are going to be looking for the same policies,” Minarik said.
“The IRS is saying that ‘any service that facilitates transactions’ is a merchant … and then it’s classifying DeFi technology as a merchant … because it only applies to a certain segment.”
Uniswap CEO Hayden Adams said he hopes the ruling will be overturned under the Congressional Review Act, and if not, he doesn’t think it will survive a “legal challenge.”
Dec. On the 27th, the US Internal Revenue Service released final rules requiring traders to report digital asset transactions, expanding existing reporting requirements to cover previously unreported areas (such as leveraged transactions).
The rule, which will take effect in 2027, will require traders to report significant amounts of money from the sale of cryptocurrencies and other digital assets, as well as information about the taxpayers involved in those transactions. The final rule states that “the only DeFi participants who will be considered traders are those who provide the underlying services.”
Robin Singh, CEO of crypto tax initiative Koinly, told Cointelegraph that the costs of implementing the required reporting systems will be prohibitive.
“For businesses operating in the DeFi space, meeting these requirements will require working with new technology,” Singh said.
“Most importantly, modern platforms lack the robust infrastructure required for traditional media, which creates significant problems for many companies,” Singer said. “All costs, no benefits,” Consensys lawyers say
Bill Hughes, a lawyer for blockchain development company Consensys, said that from a financial perspective, the ruling is “all costs, no benefits.”
– The government is not going to go quietly. The fight is on,” Hughes said in his Dec. 27 statement.
Hughes said the ruling would require front-end platforms to track and report on U.S. and global users and would affect purchases of all digital assets, including non-fungible tokens (NFTs) and stablecoins. Echoing Uniswap’s Adams, Hughes said the legislation would be reviewed by Congress but would be rejected.
– This legislation has been in the works for a long time. It looks like they just scrapped it last Friday in 2024.
