In response to significant public engagement, the U.S. Treasury has decided to extend the comment period for its proposed cryptocurrency reporting rules. Initially unveiled in late August, the proposed rules have generated a considerable amount of public interest, compelling the agency to give people more time to voice their thoughts. According to a Federal Register document slated for publication today, interested parties now have until mid-November to submit their feedback to the tax regulator.
The proposed rule aims to categorize digital asset “brokers” by including trading platforms, digital asset payment processors, and certain digital asset-hosted wallet providers. However, individual miners and validators are notably excluded from the “broker” definition, a move that has been well-received by many in the industry. Nonetheless, the rule— if enacted— would impose additional responsibilities on crypto companies, a move that has received mixed reactions from industry insiders.
Reactions from industry experts
Lawrence Zlatkin, Vice President of Tax at Coinbase, expressed concern over the complexity and burden of the new reporting requirements. In a comment letter submitted earlier this month, Zlatkin argued that the Internal Revenue Service (IRS) would be overwhelmed by a deluge of data, including trivial transactions yielding “zero or negligible taxable income.”
Additionally, Carlo D’Angelo, a crypto criminal defense attorney, highlighted the significant pressure the requirements would place on businesses. In his comment letter, D’Angelo emphasized that the rules demand the disclosure of sensitive personal identifying information. Brokers falling outside the traditional scope of regulated securities would have to collect, store, and forward that Know Your Customer (KYC) information to the IRS, using a special 1099-DA reporting form.
Moreover, the Treasury has mandated that crypto brokers adhere to the same rules as securities brokers. This includes filing information returns and providing payee statements for all customers and traders. To assist taxpayers in managing their obligations, the Treasury is also introducing a new Form 1099-DA for reporting non-employment income from digital assets.
Given the intricate nature of the issue, the extension of the comment period by the Treasury appears to be a prudent move. This additional time will allow stakeholders to comprehensively assess the implications of the proposed rule and furnish their opinions accordingly.
Besides the existing schedule, the public hearing on the proposed regulations will proceed as planned on November 7. If demand is sufficient, a second hearing will occur on November 8. The agency has indicated that requests to speak at these hearings should be submitted via email by October 30.