"Cryptocurrency" by The Focal Project is licensed under CC BY-NC 2.0
On February 25, 2025, ATR led a coalition of 18 center-right organizations in a letter to Congress opposing the IRS’s new rule targeting digital asset brokers.
The rule expands the definition of a broker to include software developers working in crypto, imposing burdensome reporting requirements on those developers and other participants in decentralized finance. ATR and fellow signatories call on Congress to overturn this rule using the Congressional Review Act (CRA).
The rule goes beyond targeting actual brokers and attempts to capture all those in decentralized finance, a clear power-grab by regulators to invade taxpayers’ privacy.
“The rule expands the definition of ‘broker’ to include software developers behind wallets that allow users to self-custody their assets and make it easier to connect to decentralized finance (‘DeFi’) protocols—whether or not they do so for profit.”
Laws that increase liability for developers will only create more issues which will be reflected in the final price consumers pay for access to such products. Platforms that may be free could be restricted by price due to the costs of regulations they may need to offset. This is to say nothing of potential liability costs that could arise:
“Like ill-considered AI liability laws, this rule would make developers responsible for the potential uses of their products and reduce consumer choice, even when wallets are developed for free.”
Additionally, participants in decentralized finance largely do so to protect their privacy from government overreach:
“The rule also requires these industry participants to first collect and then report to the government transaction details and the personal identifying information of tens of millions of users.
“One need look no further than the recent prosecution of IRS contractor Charles Littlejohn, who stole private taxpayer files that were subsequently leaked to the press.”
The letter concludes that:
“In addition to dramatically infringing on the privacy and security of Americans, the rule disincentivizes innovation by turning developers into brokers, imposes reporting requirements that could crush crypto start-ups, and ignores clear congressional intent.”
The full letter can be read here.
