Cryptocurrencies

The Blockchain Association is once again opposing previously proposed brokerage rules.

The Blockchain Association Once Again Opposes Proposed Internal Revenue Service (IRS) Rules for Brokers; This time, the focus is on the undue burden the rules would place on investors, cryptocurrency companies, and the Internal Revenue Service itself.

In the letter, the industry advocacy group cited the Paperwork Reduction Act, which states that government regulators must not impose unnecessary and obtuse administrative requirements on individuals and entities involved in the financial system.

Spokespeople for the Blockchain Association argued that signing these proposed rules into law would add 8 billion 1099-DA tax forms to process, 4 billion lost work hours processing the forms, and an annual cost of compliance of $254 billion.

According to the figures outlined in the letter, prohibitive compliance costs and workloads are a far cry from previous IRS projections that estimated the new regulations would take 0.15 hours per customer, with a total compliance cost of 136 $350,000.

Page 2 of the Blockchain Association’s latest letter to the IRS. Source: Blockchain Association.

Additionally, the Blockchain Association concluded that imposing annual compliance costs of $245 billion is completely unreasonable for an asset class and market that generates a tax gap of at most $10 billion.

First objection letter from the Blockchain Association

In 2023, the Blockchain Association wrote a 39-page letter to the IRS detailing a comprehensive list of objections to the government agency’s proposed brokerage regulations.

about: FTX Reaches $200 Million Settlement With IRS Over Tax Bill.

The industry advocacy group described the Internal Revenue Service’s proposed broker reporting rule as government overreach, explaining that some entities in the blockchain ecosystem, namely decentralized financial protocols, would struggle , at best, to comply with these rules.

Ultimately, the letter exposed a “fundamental misunderstanding” about cryptocurrencies, digital assets and decentralized finance on the part of U.S. government officials, who are struggling to understand the paradigm shift ushered in by blockchain technology.

It is not very popular in the crypto community

The Internal Revenue Service’s proposed tax rules and reporting standards have sparked a backlash from the cryptocurrency community, with many individuals and organizations expressing disdain for the disconnected requirements.

Echoing the objections contained in the Blockchain Association’s original letter, Jerry Brito, CEO of CoinCenter, highlighted the logistical difficulties of imposing such reporting requirements on decentralized networks and their participants.

review: Beyond Cryptocurrency: Zero-Knowledge Evidence Shows Possibility of Voting and Even Funding.

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