Uniswap CLO says IRS defi broker rule should be challenged

The recent ruling by the US Internal Revenue Service (IRS) classifying decentralised exchanges as brokers has drawn scepticism from crypto executives and legal experts.

"No shortage of ways to challenge this, and it absolutely should be challenged," stated Uniswap's (CRYPTO:UNI) chief legal officer, Katherine Minarik, expressed strong opposition.

Minarik criticised the IRS’s definition of brokers, arguing that the agency appears to classify decentralised finance (DeFi) technologies as brokers simply because they play a part in transactions.

She further questioned the IRS’s approach, noting that DeFi platforms are not involved in the entirety of a transaction.

Uniswap CEO Hayden Adams shared Minarik’s concerns, hoping the ruling will be rejected under the Congressional Review Act or, if not, will be overturned through legal challenges.

The new IRS rules, issued on December 27, require brokers to report digital asset transactions, extending existing regulations to include platforms such as decentralised exchanges.

Set to take effect in 2027, these rules require brokers to disclose gross proceeds from digital asset sales, along with taxpayer information involved in the transactions.

However, according to the IRS, only front-end service providers in the DeFi space will be considered brokers.

Koinly CEO Robin Singh warned that implementing the necessary reporting systems could be costly for businesses operating in the DeFi sector.

Singh emphasised that the decentralised nature of these platforms creates significant challenges for compliance.

Consensys lawyer Bill Hughes criticised the ruling, calling it "all cost, no benefit" from a revenue perspective.

He also suggested that the timing of the rule's release during the holiday season was intentional.

Hughes echoed Adams’ view, asserting that the rule could be disapproved through Congressional review.

At the time of reporting, the Uniswap (UNI) price was $13.44.