Lawsuit Submitted Against IRS over Defi Intermediary Regulations in the U.S.
As of August 2025, the lawsuit filed by the Blockchain Association, Texas Blockchain Council, and DeFi Education Fund against the U.S. Internal Revenue Service (IRS) regarding new rules requiring DeFi companies to provide user and transaction data has yet to be resolved or significantly advanced.
The lawsuit, which is centred around taxation rules for staking income in the Tezos blockchain, claims that the proposed rules are detrimental to the fairness of the DeFi system, exceed the IRS's authority, violate the Infrastructure Investment and Jobs Act, and infringe on users' privacy. It also alleges that the proposed rules violate the U.S. Constitution.
The regulatory and legislative environment surrounding this issue has seen some significant developments. On April 10, 2025, Congress passed a joint resolution disapproving the IRS's "Gross Proceeds Reporting" rule, which had required DeFi exchanges and other crypto service providers to report user transaction details for tax purposes. This resolution, signed by former President Trump, instructed the Treasury and IRS to remove the rule from the Federal Register.
This legislative action essentially halted the IRS rule that had prompted concerns from DeFi stakeholders about privacy and regulatory burdens. The IRS has since extended transitional relief related to backup withholding requirements on digital asset transactions through 2026 and 2027, easing some immediate compliance pressures on crypto brokers.
Meanwhile, broader legislative efforts like the GENIUS Act and the CLARITY Act have progressed, establishing federal frameworks for stablecoins and digital asset markets. However, these efforts do not directly resolve the specific IRS reporting rule lawsuit.
Industry voices, such as the Crypto Council for Innovation, continue to advocate for tax policy clarity and constructive government-industry partnerships, highlighting ongoing challenges around compliance. Marisa Coppel, Head of Legal at the Blockchain Association, has expressed concerns about the government's actions increasing risks and creating opportunities for inequality in DeFi. She also stated that the government is imposing intermediaries where there are none in DeFi.
As the lawsuit against the IRS continues, it remains to be seen how the regulatory landscape will evolve and whether the court will rule in favour of the plaintiffs. The current status appears to be that the lawsuit remains unresolved or inactive in light of the Congressional disapproval, with regulatory developments focusing on broader crypto tax and compliance frameworks rather than the specific DeFi data reporting rule challenged in the suit.
The DeFi Education Fund's lawsuit, concerning the taxation rules for staking income in the Tezos blockchain, is currently unresolved and has not significantly advanced, due to the Congressional disapproval of the IRS's "Gross Proceeds Reporting" rule in April 2025. This situation has resulted in a regulatory focus on broader crypto tax and compliance frameworks, such as the GENIUS Act and the CLARITY Act, rather than addressing the specific DeFi data reporting rule at the heart of the lawsuit.
