Michele Korver, the head of regulation at a16z Crypto, has expressed support for the lawsuit against the U.S. Treasury, Secretary Janet Yellen, and the country’s Internal Revenue Service over the new “DeFi brokers regulation rules.”
a16z Crypto Joins Others in Lawsuit Against DeFi Broker Rules
In an X post, Korver expressed concerns regarding the new broker reporting rules issued by the U.S. Treasury. Korver announced that a16z Crypto supports the lawsuit filed by the Blockchain Association, DeFi Education Fund, and Texas Blockchain Council. The lawsuit claims that the U.S. Treasury and Internal Revenue Service have exceeded their statutory authority, violated the Administrative Procedure Act (APA), and acted unconstitutionally.
We @a16zcrypto believe that DeFi will make financial services and the digital economy more accessible, efficient, interoperable, dependable, and consumer-focused.
However, yesterday, the @USTreasury issued a “midnight” broker reporting rulemaking that is a direct threat to that…
— Michele Korver (@MicheleKorver) December 29, 2024
Korver stated that a16z Crypto believes decentralized finance (DeFi) can enhance financial services and the digital economy by making them more convenient, efficient, interoperable, reliable, and consumer-focused. However, she argued that the new regulations pose a direct challenge to this potential and undermine the future of DeFi innovation in the United States.
She added, “This threat requires an immediate response, and that’s why we are supporting the civil action brought against @USTreasury, @SecYellen, and the IRS by @fund_defi, @BlockchainAssn, and @TXblockchain_, which challenges their doomed rulemaking.”
She emphasized that DeFi developers should have confidence that industry lawyers are working to protect this technology.
Korver concluded by stating that a16z Crypto will continue to fight on multiple fronts, including in court, with Congress, and with the help of the new administration.
New Brokers Digital Asset Transaction Regulations
The Biden-Harris Administration recently finalized new regulations for brokers involved in digital asset transactions, often associated with DeFi. These rules, part of the bipartisan Infrastructure Investment and Jobs Act, require brokers (not digital asset holders) to report gross proceeds from sales or exchanges of digital assets via Form 1099.
The regulations, as the document claims, aim to simplify tax compliance for taxpayers by ensuring DeFi brokers follow the same reporting rules as securities brokers and custodial trading platforms. Taxpayers will now receive tax documentation for their digital asset activities, reducing errors and streamlining the filing process. These rules exclude software developers and protocol operators, focusing on reducing broker burdens while closing the tax gap.
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