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News

a16z Crypto Joins Lawsuit Against IRS and US Treasury

December 29, 2024 - Around 2 mins mins to read

Key Points:

  • a16z Crypto filed a lawsuit claiming new IRS and US Treasury rules on DeFi exceed legal authority and are unconstitutional.
  • The regulations require brokers to classify DeFi platforms as brokers if they potentially influence transactions.
VC firm a16z Crypto has filed a lawsuit alongside the Blockchain Association, DeFi Education Fund, and Texas Blockchain Council against the new broker reporting rules from the US Treasury and IRS.
a16z Crypto Joins Lawsuit Against IRS and US Treasury

Read more: a16z Crypto Lead Likely to Be Nominated as New CFTC Chair

a16z Crypto Joins Lawsuit Against DeFi Regulations

The lawsuit said that the new IRS and US Treasury rules are beyond statutory authority, run afoul of the APA, and are unconstitutional. Michele Korver, head of regulation at a16z Crypto, recently voiced her concern about new regulations that force brokers to report transactions related to digital assets, including DEXs.

The rules, which come into effect in 2027, extend reporting to gross proceeds from the sale of cryptocurrency and taxpayer data for those transactions.

Korver warned that the new regulations carry significant risks to the future of DeFi innovation in the United States. She noted that DeFi has the potential to upend the way financial services and the digital economy function- making them more efficient, interoperable, and consumer-driven. She reasoned that these advances could be hamstrung by overreaching regulatory policies.

DeFi Innovation at Risk Amid New Regulatory Challenges

Kristin Smith, CEO of the Blockchain Association, announced the lawsuit and said the rules single out DeFi platforms for unfair treatment. According to the regulations, any platform that facilitates digital asset exchanges through smart contracts or exercises sufficient control over transactions could be viewed as a broker.

Korver reassured the Defi developers that industry advocates were working to protect interests, saying a16z Crypto will do everything possible to litigate these regulations, push back with Congress, and work with the incoming administration.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

a16z Crypto

Blockchain association

DeFi

DeFi Education Fund

IRS

Texas Blockchain Council

us treasury

Author

Harold

With a passion for untangling the complexities of the financial world, I've spent over four years in financial journalism, covering everything from traditional equities to the cutting edge of venture capital. "The financial markets are a fascinating puzzle," I often say, "and I love helping people make sense of them." That's what drives me to bring clear and insightful financial journalism to the readers of Coincu.