The Crypto Industry Pushes Back Against Proposed Regulation
The crypto industry is vigorously resisting a proposed regulation that would require broader reporting of certain cryptocurrency transactions, with some arguing that it hampers decentralized finance and raises constitutional concerns.
The Treasury and the IRS released a set of proposed regulations in August, prompting over 124,000 letters to be submitted, with 2,000 filed in just the past two days. Critics claim that the rules extend the definition of a broker too far.
An ‘Overly Broad’ Proposal
According to the Blockchain Association’s senior counsel Marisa Copel, the proposal is overly broad, especially for decentralized finance, and should be limited to centralized entities. She argued that the rules would force U.S.-based decentralized projects to move abroad or shut down.
Copel also raised constitutional concerns about vague definitions and privacy issues. She suggested that the Treasury should adopt a more staged approach focused on centralized trading platforms before working with DeFi participants to find solutions.
Lawrence Zlatkin, vice president of taxes at Coinbase, expressed concerns about burdensome and duplicative reporting if the rule proposal is finalized.
A Step in the Right Direction
Ryan Leverett, a taxpayer and tax preparer at a small tax firm, testified in favor of the proposed regulation, citing bad actors in the crypto industry and calling it a step in reining in dishonest practices.
Sending in Letters
The Defi Education Fund criticized the proposal for stretching the definition of a broker beyond its constitutional limits and creating a new type of broker called a “digital asset middleman.” Many letters were filed anonymously or by individuals expressing concerns about privacy rights and cybersecurity protections.
Hot Take: Crypto Industry Resists Proposed Regulation
The crypto industry’s resistance to proposed regulations showcases deep-seated concerns about privacy, constitutional rights, and the potential impact on decentralized finance. This pushback highlights the need for careful consideration and collaboration between regulatory bodies and industry participants to ensure fair and effective rules for all stakeholders involved in cryptocurrency transactions.
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