On Wednesday, Coinbase Global Inc (NASDAQ:COIN) Chief Legal Officer Paul Grewal voiced his opposition to the Treasury’s proposed regulations for tax reporting of digital assets, emphasizing the potential harm to innovation and fairness in the industry.
What Happened: Grewal argued that the proposed regulations could undermine fairness and innovation in the digital asset industry. He urged those who care about these values to join the opposition against the rulemaking. Grewal expressed concerns that the regulations go beyond establishing tax reporting rules comparable to traditional finance, potentially putting digital assets at a disadvantage.
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 rules would also set a dangerous precedent for surveillance of the everyday financial activities of consumers by requiring nearly every digital asset transaction – even the purchase of a cup of coffee – to be reported. 3/4
— paulgrewal.eth (@iampaulgrewal) October 18, 2023
He further elaborated that the rules could set a precedent for the surveillance of everyday financial activities of consumers. The requirement for nearly every digital asset transaction to be reported, according to Grewal, has no legitimate public purpose and threatens to overburden Web3 startups and the IRS.
See Also: UK Taxpayers To Disclose Crypto Holdings On Tax Forms
Why It Matters: Grewal's tweets and the senators' letter underscore the ongoing debate and concerns surrounding the proposed tax reporting rules, which will apply to transactions made with cryptocurrencies such as Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH). The discourse highlights the balancing act between ensuring tax compliance and fostering innovation in the rapidly evolving digital asset landscape.
The concerns raised by Grewal aside, U.S. Senators Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.), have also expressed their apprehensions about the delay in implementing tax reporting requirements for crypto brokers.
The senators emphasized the urgency to close the crypto tax gap, aligning the industry with other financial sectors in tax reporting, as detailed in their letter to Treasury Secretary Janet Yellen and IRS Commissioner Daniel Werfel.
Yet, the proposed regulations by the Treasury, meant to bridge the existing tax gap, have been met with resistance and concerns from various quarters, including the Blockchain Association. The association's CEO, Kristin Smith, highlighted the need for appropriately tailored regulations, given the unique nature of crypto compared to traditional assets.
Photo by BBbirdZ on Shutterstock
Read Next: U.S. Expects $5B Revenue Next Year From New Crypto Tax Rules
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