The IRS's new regulations classifying several decentralized finance (DeFi) protocols as brokers have led to significant backlash within the crypto industry, with calls for Congress to overturn these rules. Announced on December 27, the regulations require DeFi brokers to facilitate Know Your Customer disclosures, potentially affecting up to 875 brokers and impacting around 2.6 million taxpayers. Industry professionals argue that the IRS is overstepping its authority, with legal experts like Jake Chervinsky labeling the rules as an unlawful expansion of regulatory power. Advocacy groups, including the Blockchain Association, view these regulations as a final push to drive the US crypto industry offshore. They are prepared to take action against these rules and look forward to working with a new pro-crypto Congress to reverse them. The new rules include a broad definition of brokers, which may encompass various platforms providing intermediatory functions in digital asset transactions, excluding only certain validation services and wallet software providers.

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