Blockchain Association Urges IRS to Focus on Centralized Exchanges for Tax Collection
The executive director of the Blockchain Association, [Name], has expressed hope that the Internal Revenue Service (IRS) will focus on centralized exchanges for tax information collection, rather than miners, developers, and network validators. This comes in response to the $1.2 trillion infrastructure plan signed into law by President Biden in November 2021, which sparked concerns within the crypto industry that it would include individuals who do not have a typical customer relationship with those whose transactions they facilitate.
Previous Amendment Fails to Specify Exclusion of Miners, Developers and Network Validators
Senators Cynthia Lummis, Ron Wyden, and Pat Toomey had proposed an amendment to the spending plan, specifying that miners, developers, and network validators would not be included in the definition of “broker.” The amendment had the support of companies such as Coinbase, Block, Inc., Ribbit Capital, Coin Center, and the Blockchain Association itself. However, the amendment ultimately failed to receive enough votes, leaving in place a provision that would result in a massive increase in financial surveillance, according to Coinbase.
IRS Implementation of Rule Expected This Year
Tax experts had previously estimated that it would take at least two years for the IRS to implement the rule, but during an interview on the Decrypt podcast, [Name] stated, “We do expect the IRS to take this up this year.” The Blockchain Association is advocating for the IRS to adopt the language proposed by Senators Lummis, Wyden, and Toomey, and focus on collecting tax information from centralized exchanges.
Coinbase Supports Sensible Reporting Requirements for Crypto
Coinbase issued an official statement calling the provision as written “too broad and vague” and that crypto “should not be subject to potentially devastating legislation without public participation and public comment.” The company supports “sensible reporting requirements that are consistent with those that apply to traditional financial services.” The Blockchain Association stands with Coinbase, Square, Ribbit Capital, Coin Center, and other industry leaders in advocating for a fair and sensible digital asset provision in the infrastructure bill.