The human rights group Blockchain Association called on the US authorities to change the definition of “broker”, which includes traditional brokers and crypto companies, otherwise the DeFi industry will not be able to develop in the US.

The Blockchain Association sent a letter to the US Internal Revenue Service (IRS), speaking out about the definition of “broker” proposed by the US Treasury and the IRS. Previously, the agencies proposed expanding this term so that it could apply to any centralized cryptocurrency exchange operating in the United States or to any crypto project. However, the Blockchain Association fears that if this expanded concept is applied to any decentralized finance (DeFi) protocol, then all US crypto projects and even centralized crypto exchanges will be subject to the same reporting rules as traditional brokers.

“This standard cannot be imposed on DeFi projects or the industry will be destroyed forever in the United States. Or industry companies will move abroad to more cryptocurrency-friendly jurisdictions. The only way to comply with the rules is to abandon the decentralization that makes projects unique,” ​​said Marisa Tashman Coppel, senior advisor at the Blockchain Association.

The whole point of DeFi is to create reliable financial systems through the use of smart contracts and automated task execution, so that project creators cannot control client funds and do not have access to user information, the Blockchain Association emphasized. Any attempt to link wallet addresses with personal data will pose a serious threat to user privacy. This would mean exposing each user’s entire transaction history to the world.

Previously, the Blockchain Association suspected the Prometheum company of collusion with the US Securities and Exchange Commission (SEC) – in May 2023, the organization received a special broker-dealer license. Given the uncertainty of cryptocurrency regulation in the United States, the SEC could thereby prevent Congress from developing laws for cryptocurrency companies, the Blockchain Association is sure.