Crypto Group Sues IRS Over Privacy Concerns

The old world and the new world are at it again, with several crypto industry groups—including the DeFi Education Fund, Blockchain Association, and Texas Blockchain Council—having filed a lawsuit against the IRS, challenging new regulations slated for 2026–2027. 

These rules target wide-ranging reporting requirements compelling digital asset brokers to collect and disclose customer transaction data, potentially affecting up to 875 DeFi platforms and 2.6 million U.S. taxpayers. Opponents claim the IRS has exceeded its legal authority and could infringe on constitutional rights.

They also argue that the measures fail to account for DeFi's overall framework, which, in their eyes, actually stifles innovation and growth. As challenges for increased government control, this lawsuit emphasizes the ongoing tension between regulators and the broader crypto community, which may be alleviated with President-elect Trump coming into office next year. David Sacks, his crypto "czar," has deep ties to the crypto and tech sector.

Zooming out, in 2024, DeFi made some moves, some good...some bad. Crypto trading volumes hit $18.4 trillion—the second-highest on record—and averaged $1.5 trillion monthly, a 135% rise from the previous year. Binance led the market, handling 40% of all crypto trades. Despite these gains, security was a critical concern, as $1.27 billion was stolen in 90 separate hacks, including the DMM BTC exchange hack ($305 million lost), WazirX phishing attack ($234.9 million stolen), and Radiant Capital breach ($53 million). 

Despite that...major financial institutions deepened their DeFi involvement, with BlackRock launching its BUIDL fund on Ethereum, State Street partnering with Taurus for crypto custody, and Deutsche Bank announcing plans for Ethereum layer 2.