Paul Singh Grewal, the chief legal officer of the crypto exchange Coinbase, urged the crypto community to join the movement against the proposed crypto tax reporting regulations by the IRS as it threatens the industry in general.
Grewal urged the community to oppose the proposed regulations, which could set a hazardous precedent for surveillance because they could set a precedent for surveillance.
Grewal took to X (previously Twitter) to address concerns regarding the proposed crypto tax reporting rules, claiming that the proposed regulations exceed the congressional mandate to establish tax reporting rules.
He added that if the proposed regulations become law, “digital assets would be at a disadvantage, and a fledgling industry would be at risk.”
The Internal Revenue Service (IRS) published a draft of proposed crypto tax reporting regulations on August 25. Under the proposed regulations, crypto brokers must report using a new form to facilitate tax filing and reduce tax evasion.
As crypto facilitators, the proposed regulations include centralized and decentralized exchanges, crypto payment processors, and specific online wallets.
The Treasury Department claimed that the new form would facilitate the tax filing process by allowing taxpayers to determine whether or not they owe taxes without having to perform complex calculations or pay for digital asset tax preparation services.
If approved, the new tax regime will take effect in 2026, and brokers will be required to report 2025 transactions on Form 1099-DA beginning in January 2026. Nevertheless, numerous U.S. legislators urged the IRS to implement crypto tax reporting requirements before 2026.
The Treasury Department asserted that the crypto tax reporting rules would align digital assets with conventional financial reporting, but Coinbase’s legal officer insists this is not the case.
Grewal stated in his X post that the proposed rules would establish a “dangerous precedent for surveillance of consumers’ everyday financial activities by requiring nearly every digital asset transaction – even the purchase of a cup of coffee – to be reported.”
The chief legal officer of Coinbase stated that the proposed regulations would necessitate collecting a substantial quantity of user data for no “legitimate public purpose.”
Grewal noted that the data collection would overburden Web3 businesses with expensive requirements while providing the IRS with more information than it could analyze.
