Blockchain Group Challenges IRS Broker Rule
2 min read
Blockchain Group Challenges IRS Broker Rule
The Blockchain Association is once again challenging the Internal Revenue Service’s (IRS) proposed broker-dealer rules, emphasizing the undue burden these rules would place on investors, cryptocurrency companies, and the IRS itself. In a recent letter, the industry advocacy group referred to the Paperwork Reduction Act, which mandates that government regulators should avoid imposing unnecessary and complicated paperwork requirements on entities and individuals involved in the financial system.
Representatives from the Blockchain Association argue that if these proposed rules are enacted, they would result in the creation of 8 billion 1099-DA tax forms. This would necessitate 4 billion hours of labor to process these forms, leading to an annual compliance cost of $254 billion. The letter outlined these figures in stark contrast to the IRS’s earlier projections, which estimated that the new regulations would require only 0.15 hours per customer to complete, with a total compliance cost of $136,350,000.
The Blockchain Association emphasized that the proposed compliance costs of $254 billion annually are disproportionately high, especially considering that the tax gap for this asset class and market is at most $10 billion. This disparity highlights the unrealistic nature of the proposed rules and their potential negative impact on the burgeoning cryptocurrency industry.
In 2023, the Blockchain Association had already voiced its concerns through a 39-page letter to the IRS. This earlier document outlined a comprehensive list of objections to the proposed broker regulations, which the industry advocacy group considered as an overreach by the government. The letter pointed out that entities within the blockchain ecosystem, particularly decentralized finance (DeFi) protocols, would struggle to comply with these rules.
The letter further criticized U.S. government officials for their “fundamental misunderstandings” about cryptocurrencies, digital assets, and decentralized finance. According to the Blockchain Association, these misunderstandings stem from an inability to grasp the paradigm shift introduced by blockchain technology. This lack of comprehension could lead to the misapplication of traditional regulatory frameworks to a rapidly evolving and unique financial landscape.
The proposed tax rules and reporting criteria from the IRS have sparked significant backlash from the crypto community. Many individuals and institutions have expressed their disdain for the out-of-touch requirements being proposed. This sentiment echoes the objections detailed in the Blockchain Association’s original letter.
Jerry Brito, executive director at Coin Center, has also voiced his concerns, pointing to the logistical difficulties of imposing these reporting requirements on decentralized networks and their participants. According to Brito, the nature of decentralized finance makes it nearly impossible to comply with such stringent reporting standards.
These objections highlight the broader issue of how traditional financial regulations can stifle innovation in emerging sectors like cryptocurrencies and decentralized finance. It remains to be seen whether the IRS will take these concerns into consideration and adjust their approach to regulation. Until then, the crypto community remains vigilant, advocating for a more nuanced and understanding regulatory framework.
It’s about time someone called out these unnecessary complexities. Way to go, Blockchain Association!
Grateful for the Blockchain Associations relentless effort. These IRS proposals are way off mark.
These proposed rules are nothing but a bureaucratic nightmare for everyone involved in crypto. Wake up, IRS!
👏 Amazing effort by the Blockchain Association! These proposed rules are indeed burdensome. 🤷♂️📉
The figures presented are staggering. Thank you, Blockchain Association, for fighting this battle!
Incredible advocacy work! Thank you, Blockchain Association, for protecting our industry.
How can you expect an entire industry to comply with messy and impractical rules? The burden is too high for both companies and individuals.
Unrealistic compliance hours and costs just prove the IRS has no grasp on what they are regulating.
The compliance costs are absolutely unrealistic. Great job pointing this out, Blockchain Association. 💸⏳📘
Kudos to the Blockchain Association for standing up to the IRS. This is definitely overkill.
The Blockchain Association makes a valid point. The compliance burden is just too much. 💡⚖️
This is government overreach at its finest. Blockchain technology is different, and the IRS needs to educate themselves before making such demands.
Unrealistic compliance requirements are a huge barrier. Thank you for highlighting this, Blockchain Association.
These numbers are shocking! Kudos to the Blockchain Association for making this known.
Jerry Brito and the Blockchain Association are spot on! These proposals need a serious rethink.
Yes, this is what we need. Sensible regulation for a revolutionary technology. Thank you! 🙏💡🧩🙌
billion forms and 4 billion hours of labor? These rules are beyond unrealistic and absurd. The IRS needs to rethink this! 📝💔
Wow, 8 billion tax forms! That’s mind-boggling. Good thing we have the Blockchain Association on our side. 📑🔍✊
Glad to see the Blockchain Association tackling these arbitrary rules. Keep pushing forward! 🚀💼💪
The IRS’s projections are so far off from reality, it makes you wonder if they even consulted anyone from the crypto space.
Amazing clarity and dedication from the Blockchain Association! These rules are indeed way overboard. 🎯💪📘
The potential negative impact is massive. Great call, Blockchain Association, for protecting the industry!
The proposed regulations will just drag the IRS, investors, and crypto companies through unnecessary chaos. There has to be a better way.
The Blockchain Association is doing a fantastic job! Such unrealistic rules must be opposed. 💼⚖️🛑
These rules would be a nightmare for everyone involved. Kudos to the Blockchain Association for the pushback! 🛑📝💼
How can the IRS expect decentralized networks to comply with these rules? It’s like they didn’t do any research.
How can the IRS impose such heavy requirements without understanding the impact? They need to listen to the experts! 🔈
The IRS’s misunderstanding of blockchain and cryptocurrencies is clearly showing with these proposed rules.
The IRS clearly doesn’t understand the complexities of blockchain! This is just going to burden everyone involved in the crypto space!
Totally unreasonable requirements. Hats off to the Blockchain Association for pointing this out! 🎩📜📉
This is the kind of advocacy we need in the crypto world. Keep it up, Blockchain Association!
Outstanding job articulating the absurd compliance costs. We need more voices like the Blockchain Association. 👏📊🔍
These new rules are going to stifle innovation in the crypto world. IRS needs to back off!
Fantastic work highlighting the disparities. This truly deserves attention.
It’s so refreshing to see someone standing up for common sense in regulation. Thank you, Blockchain Association!
Props to the Blockchain Association for challenging this! Regulations must make sense for the modern era.
These regulations will cost way more to comply with than any tax gap they intend to close. Just hurts innovation!
We need more advocacy like this. Thank you, Blockchain Association, for protecting the crypto space!
This is going to hurt the growing cryptocurrency industry hard. The IRS needs to reassess its understanding of DeFi. 🚀➡️📉
billion annually in compliance costs is insane! Clearly shows the IRS is not considering the real impact on the industry.
Couldn’t agree more with the Blockchain Association. This isn’t justifiable at all! 👍🔍📊