Coinbase’s global vice president of tax, Lawrence Zlatkin, is sharing his critique on an editorial response from Bloomberg that discusses the crypto provisions defined in the ongoing US infrastructure bill.
Bloomberg’s op-ed took the stance that the crypto provisions within the original bill will help to bolster the government’s tax revenue from crypto entities paying what they owe.
In his response, Zlatkin shares that he disagrees with the urgency of the drafting of the bill and its unexpected crypto tax provision. He believes the sudden proposal is unfair to a large number of US citizens that own cryptocurrencies.
“Today, around 60 million Americans own crypto – roughly one-fifth of the entire US population. Those Americans, and the entire crypto ecosystem, deserve more dialogue than midnight provisions inserted at the last minute.”
The original infrastructure bill imposes strict requirements on crypto exchanges and other entities to disclose transactions to the Internal Revenue Service (IRS) for tax-reporting purposes, which are structured similarly to the guidelines placed on traditional financial brokers.
Zlatkin argues that placing these requirements on crypto participants will stifle innovation in the emerging sector.
“Tax policy should be thoughtful and deliberate. Broad overreach is a regulatory mistake…This will harm innovation and stifle the potential of a hugely important technology at its earliest stages of development.”
Crypto advocates in Congress think that the term “broker” in the original bill casts a wide net on participants in the crypto landscape, presenting unreasonable requirements for validators, miners, and digital wallet developers.
Zlatkin agrees and further suggests that lawmakers could clearly redefine “broker” to include more practical entities who operate as middlemen for compensation between customers, such as Coinbase.
“If Congress decides that it must create a new definition of ‘broker’ within the infrastructure bill for ‘digital assets,’ then it should define brokers as persons who act as middlemen for compensation, with customers as counterparties. This is a traditional definition of broker and would cover entities like Coinbase.”
Along with redefining the term “broker,” Zlatkin also thinks Congress should propose regulations to define the parameters of crypto tax information reporting and hold hearings in Congress on crypto tax oversight.
He stresses that Congress should not be drafting legislation on problems that don’t actually exist.
“If we focus our laws on problems that don’t actually exist, we will erode America’s leadership in crypto. Why chill the industry in its infancy and send it (and the taxes associated with it) offshore?”
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