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Summary
The Blockchain Association expresses disapproval of IRS’s proposed broker-dealer regulations due to high labor constraints and compliance costs, emphasizing the burden on cryptocurrency businesses, investors, and the IRS.
Introduction
The Blockchain Association’s recent letter highlights the significant impact of proposed IRS regulations on the cryptocurrency industry, focusing on the excessive compliance costs and administrative burdens imposed by the new laws.
Main Points
The Blockchain Association estimates that the new regulations would lead to a yearly compliance cost of $254 billion, the processing of 8 billion 1099-DA tax forms, and 4 billion hours of work, far exceeding IRS’s initial projections. The association argues that the $245 billion compliance expenditure is disproportionate to the $10 billion tax deficit generated by the market and asset class.
Moreover, the association raised concerns over the practicality of compliance for certain blockchain ecosystem participants, particularly decentralized financial protocols, who may struggle to adhere to the new reporting regulation.
Conclusion
The Blockchain Association’s letter underscores the significant challenges posed by the IRS’s broker-dealer regulations, advocating for a more balanced approach that considers the unique characteristics of the cryptocurrency industry and the associated compliance costs.
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