Consensys Urges IRS to Delay Proposed Crypto Tax Regulation for Brokers and Exchanges
Consensys, a prominent blockchain development firm, has taken a stand against the proposed tax regulation by the U.S. Internal Revenue Service (IRS) that would require brokers and exchanges to report certain sales of cryptocurrencies. In a letter sent to the IRS, Consensys expressed concerns about the burden this regulation would place on entities that do not traditionally have reporting obligations.
The IRS had published an early version of Form 1099-DA in April, based on tax reporting rules proposed last August. These rules would treat crypto brokers similarly to traditional brokers for products like stocks and bonds, requiring them to file 1099-DA forms for certain crypto transactions. The draft form listed various types of brokers, including kiosk operators, digital asset payment processors, and wallet providers.
Consensys, known for developing the popular MetaMask wallet, criticized the draft form for its lack of clear instructions and broad definition of a broker. The firm raised concerns about the potential for multiple parties to report the same transaction and highlighted the challenges faced by software developers in complying with the regulations.
In addition to these issues, Consensys also pointed out the limited time brokers have to comply before the upcoming tax filing deadline. The firm’s senior counsel, Bill Hughes, urged other affected companies to comment on the regulation before the deadline.
Ji Kim, chief legal and policy officer at the Crypto Council for Innovation, also criticized the IRS for listing unhosted wallet providers as brokers, noting that these providers do not have knowledge of transaction details or parties involved.
The debate over the proposed tax regulation highlights the complexities of regulating the crypto industry and the challenges faced by companies in complying with evolving rules. As the deadline for comments approaches, the industry awaits further developments in this ongoing saga.