By
Steve Muchoki
April 25th, 2024
Aside from Coinbase has raised concerns about the potential adverse impact of the proposed law across various sectors within the digital asset ecosystem.
The recent proposal from the US Internal Revenue Service (IRS) regarding crypto tax regulations has drawn strong criticism from Coinbase, the largest cryptocurrency exchange in the United States. Expressing deep concern, the exchange emphasized that the proposed IRS rule could pose a significant threat to both the crypto industry and the privacy of American citizens.
In a formal letter addressed to the agency, Lawrence Zlatkin, the vice president of tax at Coinbase Global Inc, emphasized that the proposed rules would lead to an intrusive level of monitoring, burdening both the industry and individuals with complex and onerous reporting requirements.
IRS Proposes New Crypto Rules to Promote Fairness
The proposed regulations in question were introduced by the US Treasury and the Internal Revenue Service in August to oversee the sale and exchange of digital assets by brokers.
Under the proposed rules, newly designated brokers would be required to report digital asset sales and exchanges. With this, the IRS aims to facilitate tax calculations for taxpayers and streamline the process of filing tax returns for digital asset transactions, thereby promoting a fair and consistent approach to tax.
However, Zlatkin argued that these regulations could impede the very growth and progress the IRS seeks to facilitate in the crypto sector.
Coinbase believes the approach is unprecedented, unchecked, and unlimited tracking of the daily lives of Americans. It was said that:
“The proposed regulations, as written, would impose an unprecedented, unchecked, and unlimited tracking on the daily lives of Americans. It would enable government surveillance of Americans’ choices about their most private health care decisions, or even when they purchase a cup of coffee.”
The crypto exchange has called upon the IRS to review the proposal, suggesting a more targeted approach that would streamline reporting requirements and minimize the burden on the broader crypto ecosystem without compromising the goal of ensuring tax compliance.
New IRS Rules Could Stifle Innovation
Aside from Coinbase, the Blockchain Association, a prominent US crypto advocacy group, has raised concerns about the potential adverse impact of the proposed law across various sectors within the digital asset ecosystem. The group warned that the stringent regulations could stifle innovation and growth within the industry.
In contrast to the recent concerns about the negative impact of the proposed laws, a group of Democratic senators, led by Sen. Elizabeth Warren, has urged the IRS to accelerate the implementation of the regulations, emphasizing potential financial losses and the need to ensure compliance among taxpayers.
“Limiting any further delay in the implementation of the Administration’s proposed rule would combat industry efforts to evade regulation, provide clarity to law-abiding taxpayers, and generate billions in tax revenue from a chronically tax-avoidance industry,” Sen. Elizabeth Warren, D-Masss., and others said in a letter dated October 10.
Meanwhile, the deadline for submitting comments to the tax authority is October 30, and a public hearing has been scheduled for November 7.