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Coinbase’s Grewal critiques treasury’s crypto tax reporting plan

Coinbase

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TL;DR

  • Coinbase’s Chief Legal Officer, Paul Singh Grewal, voices concerns over the U.S. Treasury’s proposed cryptocurrency tax reporting regulations.
  • Grewal urged the crypto community to oppose the new rules due to potential surveillance risks.
  • IRS’s draft regulations mandate crypto brokers to use a new form covering various crypto platforms and services.

Coinbase’s Chief Legal Officer, Paul Singh Grewal, has expressed strong concerns over the U.S. Treasury’s proposed cryptocurrency tax reporting regulations. Taking to X, the platform formerly known as Twitter, Grewal urged the cryptocurrency community to rally against the impending regulations, cautioning about the potential for increased surveillance.

On August 25, the U.S. Internal Revenue Service (IRS) made its draft of the crypto tax reporting regulations public. Under these proposed rules, crypto brokers would be obligated to utilize a new form to streamline the tax filing process and deter tax evasion. Significantly, this would encompass centralized and decentralized exchanges, crypto payment processors, certain online wallets, and crypto brokers.

The Treasury Department has pitched this new form as a tool to ease the tax filing process. With its implementation, they assert that taxpayers could readily identify if they owe taxes without resorting to intricate calculations or seeking assistance from digital asset tax preparation services. If greenlit, this tax structure would take effect from 2026, mandating brokers to report 2025 transactions as early as January 2026 through Form 1099-DA. However, some U.S. lawmakers are pushing for a faster rollout of the crypto tax reporting mandates, advocating for a date earlier than 2026.

Despite the Treasury Department’s stance that the proposed rules would bring digital assets in line with traditional financial reporting, Grewal disputes this notion. In his post on X, he highlighted that the regulations could pave the way for heightened surveillance of the everyday financial activities of consumers. He drew attention to the possibility of even minor transactions, like buying a coffee, needing to be reported.

Additionally, Grewal pointed out the substantial user data collection inherent in the proposed regulations, seeing no “legitimate public purpose” in such extensive data gathering. He expressed concerns over the strain these rules would place on emerging Web3 startups due to steep compliance costs. Moreover, he doubts the IRS’s capacity to process and analyze the massive influx of data effectively.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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Mutuma Maxwell

Maxwell especially enjoys penning pieces about blockchain and cryptocurrency. He started his venture into blogging in 2020, later focusing on the world of cryptocurrencies. His life's work is to introduce the concept of decentralization to people worldwide.

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