ConsenSys Calls for Delay of New IRS Reporting Rules as Industry Unites Against ‘Unclear’ Regulations

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As a seasoned crypto investor with a background in software development, I wholeheartedly support ConsenSys’ stance on the IRS’ new crypto tax reporting regulations. The broad definition of a “broker” and the lack of clear instructions for completing the Form 1099-DA are significant concerns that could burden businesses and potentially compromise user privacy.

ConsenSys, a prominent blockchain development company, is appealing to the US Internal Revenue Service (IRS) to delay the enactment of fresh crypto tax reporting directives. The organization contends that these new guidelines are ambiguous and employ overly broad language, creating undue stress for the entire sector, particularly software developers.

ConsenSys Bemoans IRS’ Unclear Definitions and Heavy Burden on Businesses

The primary issue of contention for ConsenSys hinges on the expansive interpretation of a “broker” in the proposed legislation. According to these guidelines, entities involved in crypto transactions such as software developers like ConsenSys (developers of the widely-used MetaMask wallet), could be labeled as brokers. As a result, numerous parties may be required to report the same transaction, leading to potential complications and confusion.

Additionally, ConsenSys expressed concerns over the unclear guidelines provided in the newly introduced Form 1099-DA for reporting cryptocurrency transactions. In their correspondence with the IRS, they highlighted that the form poses further complications due to insufficient instructions for brokers.

One concern raised by ConsenSys in relation to privacy matters is that developers of self-custody wallets, such as MetaMask, might not possess all the necessary information to complete transaction reporting forms accurately. This could potentially infringe upon users’ privacy if incomplete or incorrect data is submitted. In a letter to the IRS, ConsenSys stated:

As a crypto investor, I strongly believe that manually inputting data into forms for software developers could potentially bring about the downfall of U.S. companies, without a doubt.

According to ConsenSys, the regulatory body has allowed very limited time for businesses to adapt to the new reporting regulations. As a result, some companies might find it challenging to comply with the new tax filing requirements before the deadline arrives.

Rallying Call to Crypto Industry as Optimism Rises

As a crypto investor, I’ve noticed that ConsenSys intends to utilize a publicly available letter as a rallying cry for the broader blockchain industry. According to Bill Hughes, their senior counsel, he urged other concerned firms to express their views to the IRS prior to the comment deadline.

Significantly, organizations like ConsenSys and the Crypto Council for Innovation (CCI) have voiced their concerns regarding the proposed IRS regulations. The CCI, in particular, pointed out that labeling unhosted wallet providers as brokers is unrealistic. This is due to the fact that these entities lack access to comprehensive transaction data or user identities, making it difficult for them to comply with reporting requirements.

As a seasoned crypto investor, I’ve noticed a growing sense of optimism in the industry regarding regulations. This positive outlook was further reinforced in a recent report by Coinspeaker, where ConsenSys founder Joseph Lubin expressed his belief that the ongoing regulatory crackdowns by the US Securities and Exchange Commission (SEC) on crypto firms may soon be easing up.

Lubin’s perspectives lean towards reconciliation following the SEC’s move to conclude its lengthy dispute with Ethereum (ETH‘s price dynamics). Though the SEC has terminated its probe into ETH, ConsenSys remains committed to pursuing their lawsuit against the regulatory body and bringing it to a satisfactory conclusion. Filed in April, this legal action aims to secure clearer guidelines from the SEC concerning cryptocurrency regulations.

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2024-06-21 16:06