Washington, D.C. (Nov. 13, 2023) – Today, pursuant to the Internal Revenue Service’s Proposed Rulemaking REG-122793-19, the Blockchain Association submitted comment in response to the proposed regulations concerning reporting requirements for digital asset transactions.
The proposed regulations reflect fundamental misunderstandings about the nature of digital assets and decentralized technology, more broadly. The proposal captures entities that do not align with the traditional understanding of who constitutes a “broker” and would improperly force centralization where it does not exist. The IRS has gone beyond their statutory authority in expanding the definition of “broker” beyond what Congress clearly intended in the 2021 Infrastructure Investment and Jobs Act.
Given the impossible compliance obligations, developers would likely abandon the core decentralized technology that defines their project’s utility and value. If adopted, these regulations would drive all U.S.-based decentralized projects either out of existence or to non-U.S. jurisdictions.
The following statement is attributed to Kristin Smith, Blockchain Association CEO:
“The Treasury Department should take additional time to understand how damaging and impractical the expanded broker definition would be to developers of decentralized technology in the U.S. Not only that, but Treasury’s proposal constitutes an infringement on the privacy rights of individuals using decentralized technology. Needless to say, we cannot afford to push this entire, burgeoning technology to other jurisdictions. Doing so because of a misguided federal tax reporting requirement would be an unnecessary, ineffective, and self-inflicted blow.”