The Blockchain Association has raised concerns about the onerous demands placed on the industry by the Internal Revenue Service’s (IRS) recent proposed rule change. These worries are based on the massive number of forms—over 8 billion—that would be needed to comply with the rule, introducing a significant administrative weight expected to surpass $254 billion. This cost far exceeds the estimated $10 billion gap the rule aims to address tax-wise.
In their public statement, the Blockchain Association fiercely defended the rights of brokers against overly demanding regulations. They emphasized that the rule’s request for detailed reporting is not only impractical but also goes against the purposes of the Paperwork Reduction Act (PRA). The act itself focuses on reducing excessive information collection from the public by federal entities.
An official of the Blockchain Association pointed out that the law intends to protect people from unnecessary regulatory tasks.</ This is particularly relevant when considering that the association deems the quantity of paperwork far too substantial for reasonable compliance. They argue that the IRS’s proposed broker rule does not fulfill the PRA’s requirement to keep public impact to a necessary minimum.
The proposal demanding data on so-called “unhosted” wallets, which would potentially fall under new scrutiny, has been at the center of controversy for potentially broadening the scope of tax oversight to an unfeasible extent. With these significant concerns placed on record, the industry is looking to prevent a bureaucratic obligation that may lead to expensive and cumbersome compliance duties.
The Blockchain Association has raised concerns about the onerous demands placed on the industry by the Internal Revenue Service’s (IRS) recent proposed rule change. These worries are based on the massive number of forms—over 8 billion—that would be needed to comply with the rule, introducing a significant administrative weight expected to surpass $254 billion. This cost far exceeds the estimated $10 billion gap the rule aims to address tax-wise.
In their public statement, the Blockchain Association fiercely defended the rights of brokers against overly demanding regulations. They emphasized that the rule’s request for detailed reporting is not only impractical but also goes against the purposes of the Paperwork Reduction Act (PRA). The act itself focuses on reducing excessive information collection from the public by federal entities.
An official of the Blockchain Association pointed out that the law intends to protect people from unnecessary regulatory tasks. This is particularly relevant when considering that the association deems the quantity of paperwork far too substantial for reasonable compliance. They argue that the IRS’s proposed broker rule does not fulfill the PRA’s requirement to keep public impact to a necessary minimum.
The proposal demanding data on so-called “unhosted” wallets, which would potentially fall under new scrutiny, has been at the center of controversy for potentially broadening the scope of tax oversight to an unfeasible extent. With these significant concerns placed on record, the industry is looking to prevent a bureaucratic obligation that may lead to expensive and cumbersome compliance duties.
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In discussing the Blockchain Association’s resistance to the IRS proposed rule, it’s important to explore various questions, challenges, and controversies about the topic, such as:
Important Questions:
– What are the specific reporting requirements proposed by the IRS?
– How does the Blockchain Association propose to balance regulatory compliance with operational practicality?
– What does the IRS rule mean for privacy and security of individual holders of unhosted wallets?
Key Challenges and Controversies:
– One major challenge is related to technical feasibility: the cryptocurrency ecosystem is vast and diverse, which may make centralized reporting difficult and error-prone.
– Privacy concerns also rise as unhosted wallets (personal wallets not tied to any exchange or intermediary) and their transactions could become less private given the enhanced scrutiny.
– There is an ongoing debate within the broader financial community regarding the necessity of these regulations versus the importance of encouraging innovation within the blockchain industry.
Advantages and Disadvantages:
– Advantages: Improved IRS regulations could potentially reduce tax evasion and increase transparency in the cryptocurrency market.
– Disadvantages: Excessive compliance costs and administrative burdens could stifle innovation and deter businesses from engaging with blockchain technology.
For those interested in further information on such matters, authoritative resources such as the Blockchain Association itself can be found at their main domain, theblockchainassociation.org, and information about the Paperwork Reduction Act and IRS regulations can be earned from government official resources such as irs.gov.
