The Chief Legal Officer of Coinbase crypto exchange, Paul Singh Grewal, has called on the crypto community to oppose the United States Treasury’s proposed tax reporting regulations on cryptocurrencies. Grewal believes that these regulations could set a dangerous precedent for surveillance.
Grewal took to X (formerly Twitter) to address the concerns associated with the proposed crypto tax reporting rules. He argued that these rules go beyond the congressional mandate and could disadvantage digital assets and harm the nascent industry.
Everyone who cares about fairness and supports American innovation should chime in on Treasury’s proposed regulations for tax reporting of digital assets. You can join @StandwithCrypto’s opposition to the rulemaking here. 1/4 https://t.co/4eALt1Frxo
— paulgrewal.eth (@iampaulgrewal) October 18, 2023
The U.S. Internal Revenue Service (IRS) released a draft of proposed regulations for crypto tax reporting on August 25. These regulations apply to centralized and decentralized exchanges, crypto payment processors, online wallets, and crypto brokers. The aim is to simplify tax filing and reduce tax evasion.
The U.S. Treasury Department claims that the new reporting form will streamline the tax filing process and help taxpayers determine their tax obligations more easily. If approved, the regulations will go into effect in 2026, with brokers required to report 2025 transactions using Form 1099-DA starting in January 2026. However, some lawmakers are urging the IRS to implement the reporting requirements earlier than 2026.
However, Coinbase’s Chief Legal Officer disagrees with the Treasury Department’s claims. Grewal argues that the proposed regulations set a dangerous precedent for surveillance and would require reporting of every digital asset transaction, including small purchases like a cup of coffee. He also believes that the regulations would burden Web3 startups with unnecessary costs and provide the IRS with more data than they can handle.
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