Chairman of the House Financial Services Committee, Patrick McHenry (R-NC) and Congressman Ritchie Torres (D-N.Y) led a group of nine lawmakers in the effort calling the tax reporting requirement “unworkable.”
“If finalized, the proposed regulation’s overly broad definition of a digital asset “Broker,” insufficient definition of a “Digital Asset,” and unreasonably short comment period threaten to prevent a large swath of the digital asset ecosystem from continuing to exist in the United States,” the Wednesday announcement said as it made public the Nov. 10 letter addressed to the U.S. Treasury Department’s Assistant Secretary Lily Batchelder.
The crypto tax rule was proposed in August, and a public comment period ended Monday after more than 124,000 comments. At a recent audio-only hearing, questions from officials to the industry revealed that the tax proposal may be “open for revision.” A final version is likely months away and could see a response to at least some of the industry’s condemnation.
The major sticking point is how the proposal captures hosted wallet providers, payment processors, some decentralized finance (DeFi) entities and others as “brokers” for tax reporting purposes. “The definition of ‘Broker’ remains too broad and would capture entities that do not possess traditional characteristics of a broker,” the letter said.
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