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The Crypto Roundup: 13 October 2023 | CryptoCompare.com

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Nasdaq-listed cryptocurrency exchange Coinbase has argued that a recent proposal from the U.S. Internal Revenue Service (IRS) could pose a risk to the cryptocurrency sector and the privacy of Americans.

The IRS recently put forth a rule aiming to define crypto brokers clearly and guide them and their customers on adhering to tax obligations. Coinbase has, however, said in a comment letter to the agency that the proposed rule represents “an unprecedented, unchecked, and unlimited tracking on the daily lives of Americans.”

The letter, from Coinbase Global vice president of tax Lawrence Zlatkin, reads:

 “These rules would establish an incomprehensible and unduly burdensome set of new reporting requirements that will degrade and displace the same taxpayer services the IRS is seeking to improve,”

The Blockchain Association, a U.S. crypto advocacy group, had warned that the industry in the U.S. could be destroyed if these provisions were adopted. Meanwhile, the IRS blamed crypto for reducing tax revenues in its latest estimate of the “tax gap”, which measures how much tax money the agency is missing out on.

The Treasury Department released its proposed rule in August in a nearly 300-page long document. It aimed to follow the 2021 Infrastructure Investment and Jobs Act, and defined reporting requirements for centralized crypto exchanges, payment processors, some hosted wallet providers, some decentralized exchanges and people or entities that cash out crypto tokens.

Coinbase has now asked the agency to re-write the proposal to “limit compliance requirements to those parties that directly effectuate transactions in digital assets similar to those in traditional finance.”

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