Key takeaways:
- In a letter of comment, the Blockchain Association mostly opposed the tax legislation that the IRS had proposed.
- The Blockchain Association criticized the idea, stating that many players in the cryptocurrency field would find it difficult to follow the rules if they were implemented.
The Internal Revenue Service’s (IRS) proposed tax legislation has been met with largely negative feedback from the Blockchain Association, a US-based advocacy group for cryptocurrencies.
The Blockchain Association (BA) stated in a letter dated Nov. 13 that the proposed IRS rules, which were introduced in August and intended to regulate brokers’ sales and exchanges of digital assets, went beyond the authority of the government agency and revealed “fundamental misunderstandings” regarding the nature of decentralized technology and digital assets.
A draft of the proposed regulations was made public by the US Treasury Department in August in an effort to resolve issues with tax reporting and payment for cryptocurrency transactions.
The Blockchain Association criticized the idea, stating that many players in the cryptocurrency field would find it difficult to follow the rules if they were implemented.
Many participants in decentralized finance (DeFi), according to the group, were “fundamentally unable to comply” with the new restrictions, which the BA claimed constituted the Treasury overstepping its power and perhaps infringing the right to privacy and freedom of expression guaranteed by the Constitution. Kristin Smith, CEO of BA, said:
“The Treasury Department should take additional time to understand how damaging and impractical the expanded broker definition would be to developers of decentralized technology in the US,”
Furthermore, according to Kristin, the Treasury’s proposal violates the right to privacy of people who use decentralized technology.
Since the study’s release in August, a number of American lawmakers, business leaders, and legal experts have weighed in on it, sharing their thoughts on what it might mean for the country’s future cryptocurrency taxes.
According to the present draft, transactions completed in 2025 could be subject to the proposed laws on crypto reporting starting in 2026.
Paul Grewal, chief legal officer of Coinbase, stated in October that the regulations would “threaten to harm a nascent industry when it’s just getting started.” Several US senators have backed the legislation in its current form and demanded that the rules take effect before 2026.
