Crypto Market Participants Push Back On Proposed Crypto Reporting Regulations

On November 13^th, 2023, the IRS and Treasury held a public hearing on the proposed crypto reporting regulations. These proposed regulations elaborate on the 2021 changes to the Internal Revenue Code that expanded the definition of broker to include "any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person," and are discussed in detail here.

During the hearing, various crypto market participants, representatives of exchanges, and crypto advocacy groups voiced concerns about the proposed regulations. Common concerns raised by participants included:

• Duplicative reporting could actually increase the difficulty for taxpayers filing returns, as taxpayers may receive multiple Form 1099-DAs from various brokers on any single transaction with the increased potential for inconsistencies therein;