Metamask Developer Consensys Requests IRS
Consensys, the developer of popular cryptocurrency wallet Metamask, has formally requested an extension for the implementation of the IRS broker reporting rules. The company’s lawyer, Bill Hughes, announced on Twitter that Consensys had submitted a letter to the U.S. Department of the Treasury and the Internal Revenue Service (IRS) requesting two modifications to the proposed regulations.
Firstly, Consensys stated that the proposed regulations are complex and require a thorough analysis of their potential impact on the company’s software applications. They requested an extension of the deadline for submitting comments until at least December 31, 2023, to allow for more comprehensive feedback and assessment.
Secondly, Consensys expressed concerns about the feasibility of the proposed implementation deadline, which is set for January 1, 2025. They argued that complying with the regulations would present significant technical challenges for both Consensys and similar companies. Therefore, they urged the IRS to postpone the implementation for at least one year after finalization.
New Crypto Tax Guidelines in United States
The requests from Consensys come in response to the IRS’s proposed regulations for tax reporting of cryptocurrency, non-fungible tokens (NFTs), and other digital assets unveiled in August 2023. Under these regulations, brokers would be required to report cryptocurrency transactions using Form 1099-DA, similar to traditional investments like stocks and bonds.
Initially scheduled to commence in 2024, the reporting rule was delayed in December 2022. However, it is now expected to begin in January 2026 for transactions occurring in 2025. The regulations will apply to centralized and some decentralized exchanges, crypto payment processors, and specific online wallets.
While the proposed rules aim to close the tax gap and ensure accurate reporting and taxation of crypto transactions, experts have raised concerns about relying solely on Form 1099-DA. They advocate for a “trust, but verify” approach, especially for off-chain transactions. The Treasury and IRS are open to public input as they work towards finalizing these regulations, which could lead to more crypto-friendly changes.
Hot Take: Consensys Seeks Extension for IRS Broker Reporting Rules
Consensys, the developer behind Metamask, has formally requested an extension for the implementation of the IRS broker reporting rules. The company is concerned about the complexity of the proposed regulations and the feasibility of the implementation deadline. They argue that more time is needed for comprehensive analysis and to address technical challenges.
The IRS’s proposed regulations for tax reporting of cryptocurrency and other digital assets have been met with mixed reactions. While they aim to improve tax compliance, experts suggest that additional measures may be necessary to ensure accurate reporting, particularly for off-chain transactions.
As the Treasury and IRS continue to refine these regulations, public input is crucial in shaping a more crypto-friendly framework. The outcome of this process will have significant implications for brokers, exchanges, payment processors, and individuals involved in cryptocurrency transactions.
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