The Blockchain Association and 75 firms are urging Congress to repeal an IRS law that deems DeFi software as brokers. They claim that the law requires needless data collection and may push US DeFi initiatives overseas.
Summary
• The Blockchain Association and 75 firms are urging Congress to repeal an IRS law that deems DeFi software as brokers.
• The law requires unnecessary data collection and may push US DeFi initiatives overseas.
• The Blockchain Association argues that the current adjustment may put too much pressure on developers working on DeFi systems.
• The law impacts software firms that do not own personal property by forcing them to collect and report personal identifying information and transaction details.
The Blockchain Association and Its 75 Members Submitted a Petition
Congressional leaders intend to rescind a recent Internal Revenue Service (IRS) law that threatens to force the US decentralized finance (DeFi) sector abroad.
The Blockchain Association also noted in a letter to the leaders of both houses and parties that the IRS regulation broadens the definition of a “broker” to include software that allows users to engage with DeFi protocols. The organization also stated that the current adjustment may put too much pressure on developers working on DeFi systems.
This law impacts software firms that do not own personal property by forcing them to collect and report personal identifying information and transaction details. According to the Blockchain Association, compliance would significantly alter DeFi software and may compel the use of middlemen for reporting.
According to Kristin Smith, CEO of the Blockchain Association, the organization has already launched a legal battle over the law. However, she said that convincing Congress to repeal it would take less time than any other course of action.
Impact on US DeFi Innovation
The Blockchain Association also stated that permitting the rule to go forward would damage the United States’ leadership in DeFi and finance technologies. The letter highlighted that the legislation only affects domestic DeFi enterprises, whereas overseas companies that provide similar services to US consumers are unaffected. The committee argued that this mismatch may hinder local innovation while pushing certain initiatives abroad.
“Second, the regulation presents privacy and surveillance issues. It compels DeFi industry partners to gather and keep users’ personally identifiable information, as well as submit transaction details to the IRS. This is a dramatic violation that discourages innovation.”
The Blockchain Association
Ron Hammond, the association’s senior director of government affairs, was hopeful that the regulation would be abolished across party lines. He expressed similar thoughts in 2021 when difficulties over the regulation of decentralized financing (DeFi) stalled the infrastructure bill.
Hammond attacked the Biden administration’s overregulation, claiming that the business is no longer in the learning period. He emphasized the need for policies and regulations that foster innovation while also adequately protecting consumers. He also mentioned that DeFi is getting support from finance and banking officials, saying that opinions are shifting as Trump vows to make America the leader in cryptocurrency.
Other cryptocurrency groups have voiced deep worry over the IRS ruling. The DeFi Education Fund praised the rising practice as a response to what it called unworkable and unlawful regulations.
Also Read: Elon Musk Prepared to Put Treasury on Blockchain Despite Obstacles
Elon Musk, the wealthiest person globally, is considering putting the U.S. Treasury on a blockchain network due to concerns about fraudulent government payments. Currently in charge of the interim Department of Government Efficiency, Musk has not provided any proof of his plans. Challenges include scalability, performance issues, and lack of experienced blockchain specialists…[Read More]
*Disclaimer*: We at Bitcoinleef.com present you with the latest information in the crypto market. However, this information should not be regarded as financial advice and viewers should consult their financial advisors before investing.
Wallets