The complaint was brought in a US District Court in Texas by the Texas Blockchain Council, the DeFi Education Fund, and the Blockchain Association.

The restrictions are scheduled to take effect in 2027, but the complaint claims they are "unconstitutional" and will "cripple the digital asset industry."

On December 27, the IRS released its final regulations, which will mandate that cryptocurrency brokers disclose transactions involving digital assets. Additionally, the regulations would expand the scope of reporting to encompass decentralized exchanges and other front-end platforms.

The three blockchain organizations said in a statement that the US government had disregarded industry input and had left the digital asset market with a rule that would "stifle innovation and burden American entrepreneurs" and place "unlawful compliance burdens on software developers."

"By extending the definition of 'broker' to include providers of DeFi trading front-ends, even though they do not execute transactions, the IRS and Treasury have exceeded their statutory authority," stated Marisa Coppel, head of legal at the Blockchain Association.

"This would push the entire, rapidly developing technology offshore, in addition to violating the privacy rights of individuals utilizing decentralized technology."

Miller Whitehouse-Levine, the CEO of the DeFi Education Fund, expressed his "deep disappointment" with the decision.

At the core of our work at the DeFi Education Fund is the promise that Decentralized Finance would make financial services and the digital economy more consumer-focused, dependable, efficient, interoperable, and accessible. Financial innovation is directly threatened by this regrettable regulation, and we plan to combat it with every weapon at our disposal.