Coinbase's Legal Chief Urges Crypto Community to Oppose U.S. Treasury's Proposed Tax Rules
Summary:
Coinbase's Chief Legal Officer, Paul Singh Grewal, has called on the cryptocurrency community to protest against the U.S. Treasury's proposed crypto tax reporting rules, warning they could set a harmful precedent for surveillance. The new rules require crypto brokers to report transactions using a new form to reduce tax fraud, with implementation planned for 2026. However, Grewal believes these regulations would unnecessarily burden startups with data collection and give the IRS more data than they could process, potentially jeopardizing an industry still in its developmental stages.
Paul Singh Grewal, the leading legal official at Coinbase crypto exchange, has urged crypto enthusiasts to rally against the tax reporting rules for cryptocurrencies proposed by the U.S. Treasury. Grewal implored the community to protest these potential regulations due to the threat of setting a harmful precedent for intrusive surveillance.
Grewal used X (formerly Twitter) to voice his unease regarding these impending crypto tax regulations, stipulating that these provisions supersede Congress's mandate on tax reporting norms. He clarified that these regulations, if turned into law, could place digital assets at a disadvantage and risk harming an industry still in its infancy.
The proposed crypto tax reporting constraints were unveiled in a draft by the Internal Revenue Service (IRS) on August 25. The draft outlines that crypto brokers must utilize a new form for reporting, with the aim to make tax filing simpler and curb tax fraud. The proposed constraints extend to centralized and some decentralized exchanges, along with crypto payment processors and selected digital wallets considered as crypto brokers.
The Treasury Department suggests that this new form will ease the process of filing taxes, helping taxpayers to verify tax obligations instead of grappling with intricate computations or outsourcing to digital asset tax preparation services. If approved, this updated tax structure will be executed from 2026, with brokers expected to start documenting 2025 transactions using Form 1099-DA from January 2026. However, several U.S lawmakers have appealed to the IRS for an acceleration of crypto tax reporting requirements before 2026.
The Treasury Department asserts that these crypto tax reporting norms will bring cryptocurrencies in line with conventional financial reporting. Despite this, Grewal disputes this claim in his X post, cautioning that these impending regulations would establish a worrying precedent for constant surveillance of common financial activities. Grewal asserts that these rule changes would necessitate exhaustive user data collection, beyond any legitimate public rationale. He labels this data gathering process a potential strain on Web3 startups due to steep requirements, offering the IRS an overwhelming amount of data, challenging to efficiently process.
Published At
10/19/2023 8:27:14 AM
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