Coinbase Opposes IRS Crypto Tax Proposal

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Coinbase (COIN), the largest crypto exchange in the USA, argues that the proposal recently announced by the US Internal Revenue Service (IRS) will endanger the industry and the privacy of Americans. The IRS recently proposed a rule to officially recognize crypto brokers and instruct them on how they and their clients can properly pay taxes. However, in the letter it sent to the commission, Coinbase said that this rule, which “Americans never encounter in daily life”, means “uncontrolled and unlimited monitoring”.

“These rules will disrupt the taxpayer services the IRS is trying to improve and will be replaced by a set of new reporting requirements that are incomprehensible and overly burdensome,” according to the letter from Lawrence Zlatkin, vice president of tax at Coinbase Global Inc. Previously, the Blockchain Association, a US-based crypto advocacy group, had argued that the adoption of the provisions could kill the industry in the US.

A few hours before Coinbase’s letter, the IRS pointed out “tax loopholes” that the commission should have received from the crypto industry but did not receive. Additionally, the commission described “digital assets and cryptocurrencies” as a key part of a growing problem. The Treasury Department published a nearly 300-page proposal in August that complies with the Infrastructure Investment and Jobs Act of 2021. The rules here determined reporting obligations for centralized crypto exchanges, payment and wallet providers, some decentralized exchanges, and individuals or organizations using cryptocurrencies.

Sen. Elizabeth Warren (D-Mass.) and other Democratic senators have suggested the IRS dismiss complaints from industry. Lawmakers’ primary concern is that the proposed rules would take a long time to take effect, “putting law-abiding Americans at a disadvantage.” That’s why senators say the rule should be implemented “as quickly as possible.” But Coinbase is asking the commission to regulate the proposal, which “limits transactions in digital assets to compliance requirements similar to those in traditional finance.”

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