DEF November Recap

Here’s what the DeFi Education Fund (DEF) has been up to in November. If you have any questions or would like to learn more about a specific activity, please do not hesitate to reach out at contact@defieducationfund.org.

DEF Files Amicus in Van Loon v. Department of Treasury

On November 20th, DEF filed an amicus brief in Van Loon v. Treasury, in support of plaintiffs’ appeal seeking to reverse the district court’s dismissal of the suit. This case revolves around several individuals challenging Treasury/OFAC’s sanctions designations of Tornado Cash (TC), arguing that OFAC exceeded its powers in designating smart contract addresses.

Central to our brief is while OFAC can properly sanction bad actors, it should not criminalize privacy-preserving tools like TC by designating code. Tech is a tool. It is not good or bad. Furthermore, OFAC’s designations demonstrate agency overreach. When OFAC sanctioned Tornado Cash, they exceeded their statutory authority by regulating a broad swath of transactions, including a subset that are purely domestic.

We also argue that the district court’s attempts to connect the software to foreigners’ property interests is unresponsive to how the technology actually functions and based on an incorrect interpretation of “property interests."

DEF Submits Comments re. Treasury’s Proposed “Broker” Rulemaking

On November 7, DEF, submitted a comment letter to the U.S. Treasury Department and the Internal Revenue Service (IRS) in response to their highly alarming proposed “broker” rulemaking. As we’ve previously discussed, the rulemaking would include DeFi protocols and frontends as “brokers.”

As a refresher, if finalized in their current form, the Proposed Regulations would stretch the definition of “broker” beyond what the Constitution allows, require information collection and reporting by individuals and entities incapable of collecting that information, unnecessarily endanger the personal data of millions of Americans, confuse taxpayers, stress government resources, stifle innovation, and cripple American businesses and competitiveness.

In our comment letter, among other arguments, we argue that the proposed regulations violate the Fourth Amendment’s prohibition on warrantless searches and seizures of a person’s papers and effects because individuals do not voluntarily turn over their personal data to “digital asset middlemen” who themselves neither collect nor have any legitimate business reason to collect that information.

Check out a blog post on our comment letter as well as an op-ed from Miller Whitehouse-Levine and the Blockchain Association’s Kristin Smith on the matter.

Media

Op-Eds

• CoinDesk: Congress Gets the Runaround From Regulators, Again

  • Authored by Miller Whitehouse-Levine and Kristin Smith

Print/Online

• CoinDesk: IRS 'Raided' by Crypto Investors as Industry Puts Up Fight Against U.S. Tax Proposal

  • "The digital asset middleman category stretches the statutory language beyond its breaking point in direct contravention of the relevant legislative history," the DeFi Education Fund argued in a comment letter. The current language of the proposal "inexorably leads to the conclusion that the proposed regulations could treat every participant in the blockchain technology stack as a broker."

• The Block: Crypto industry protests against Treasury's proposed tax reporting regulation

  • The Defi Education Fund said earlier this month in its letter that the proposal stretches the definition of a broker beyond its constitutional limits and that the Treasury is essentially creating a new kind of broker called a "digital asset middleman." The proposed regulations’ definition of ‘digital asset middleman’ is vague to the point of being unintelligible,” Miller Whitehouse-Levine and Amanda Tuminelli — CEO and chief legal officer of advocacy group the DeFi Education Fund respectively — wrote in a letter to the IRS.

• DL News: DeFi advocates decry US Treasury’s tax reporting broker rules

  • The proposed regulations’ definition of ‘digital asset middleman’ is vague to the point of being unintelligible,” Miller Whitehouse-Levine and Amanda Tuminelli — CEO and chief legal officer of advocacy group the DeFi Education Fund respectively — wrote in a letter to the IRS.

For up-to-date information about what’s happening in D.C. and what we are up to, please follow us on Twitter @fund_defi and subscribe to our Substack.