Coinbase Opposes New Crypto Tax Proposal by IRS
Coinbase, the largest US crypto exchange, has expressed concerns about the new crypto tax proposal created by the Internal Revenue Service (IRS). The proposed rule would require newly designated brokers to report sales and exchanges of digital assets. While miners and stakers are exempt, experts believe the rule would still have a negative impact on the entire crypto industry. Coinbase argues that the proposal could compromise the privacy of Americans and put the crypto industry at risk.
IRS Presents Long-Awaited Proposal, and It Will Only Harm the Crypto Industry
Two years ago, the Infrastructure and Jobs Act (IIJA) passed a bill that mandated broker information reporting for digital asset transactions in the US. The IRS was tasked with implementing the statute. In late September, the IRS completed its proposal, which appears to be more damaging than expected. The proposal expands the definitions of “broker” and “digital assets,” pulling more individuals into tax reporting obligations. New brokers would have to collect users’ personal information and report it to the IRS.
The proposal will ruin DeFi in the US
The proposal raises concerns about security, privacy, and access to decentralized protocols. Coinbase believes it could harm the crypto environment by creating unworkable reporting requirements and introducing invasive government surveillance. Crypto projects would also be heavily impacted, potentially leading them to move out of the country or shut down. Compliance would be impossible for decentralized crypto assets due to the lack of a central point of control.
Hot Take: Negative Impact on DeFi Sector
The current form of the IRS’ proposal will likely mark the end of the DeFi sector in the United States. This shows that US lawmakers prioritize destroying the local crypto industry rather than helping it thrive, which may have negative long-term economic consequences.
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