Blockchain Association Opposes Proposed IRS Crypto Tax Regulations, Citing Privacy and Freedom Violations
Summary:
The Blockchain Association, a US-based cryptocurrency advocacy group, has opposed tax regulations proposed by the IRS. In their letter, they argue the regulations misunderstand the nature of digital assets and decentralized technology, exceeding the IRS's authority, and potentially violate privacy and freedom of speech rights. They urge the Treasury to understand the implications for developers of decentralized technology before implementing regulations. The proposed reporting rules for cryptocurrency could be enacted in 2026, a move supported by some U.S senators.
The Blockchain Association, a cryptocurrency advocacy group situated in the United States, has issued a letter fervently opposing proposed tax regulations by the Internal Revenue Service (IRS). Dated November 13, the letter from the Blockchain Association (BA) claims that the proposed IRS legislation, introduced in August to regulate the trading and selling of digital assets by brokers, goes beyond the authority of the government agency and displays "misinterpretations about the essence of digital assets and decentralized technology". The proposed rules, drafted and released by the U.S. Treasury Department in August, aimed to resolve challenges surrounding the reporting and taxing of cryptocurrency transactions.
The Blockchain Association raised concerns about the proposed legislation, stating that many in the cryptocurrency sector might struggle to adhere to these regulations if implemented. They argued that several of those participating in decentralized finance (DeFi) are "fundamentally incapable" of complying with the regulations as laid out, suggesting that this is a sign of the Treasury overextending its reach and potentially infringing upon constitutional rights to privacy and freedom of speech.
Kristin Smith, the CEO of the Blockchain Association, advised the Treasury Department to take more time to comprehend the harmful and impractical effects that the expanded broker definition could have on U.S. developers of decentralized technology. She further stated that the Treasury's proposal infringes on the privacy rights of individuals using decentralized technology.
Numerous U.S. lawmakers, industry chiefs, and legal authorities have voiced their opinions on the potential implications of the proposed tax legislation since the draft's release in August. As per the current draft, the suggested rules on reporting cryptocurrency could be active in 2026 for transactions carried out in 2025. Paul Grewal, the chief legal officer for Coinbase, cautioned that the rules could potentially “endanger a budding industry when it’s just getting started“ in October. Interestingly, several U.S. Senators have endorsed the current draft as is, and have urged that the legislation be applied earlier, before 2026.
Published At
11/13/2023 8:20:46 PM
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