By Michael Scott
The Blockchain Association said Monday that implementing the suggested redefinition of one word in the federal tax regulation by the United States Treasury and the Internal Revenue Service (IRS) would irreversibly damage or push away all decentralized finance (DeFi) projects in the U.S.
On Monday, the crypto lobbying group begged the IRS to change its mind on the definition of a word or end up damaging DeFi in the United States.
Broker Definition Threats to Eradicate Decentralized Finance
The lobbying group provided a fiery 33-page comment concerning the recommended change. It contained a detailed case to the Internal Revenue Service explaining why an apparently bureaucratic alteration to the meaning of the term ‘broker,’ which was suggested in late August, would kill the United States’ decentralized finance industry.
The rule would have some implications, one of them being widening the term ‘broker’ to represent all centralized exchanges operating in the U.S. or crypto projects that directly or indirectly enable the movement of digital assets owned by another individual.
According to the Blockchain Association, the move would apply to all decentralized finance protocols. It would abide by provisions similar to those of United States centralized exchanges and DeFi projects, thereby subject to reporting guidelines applied to stock and bond brokers.
According to the Blockchain Association, this impossible standard cannot be enforced on decentralized finance projects. On Twitter, Marisa Tashman Coppel, senior counsel at the Blockchain Association, claimed the move would result in American-founded decentralized projects moving abroad or becoming extinct.
As explained in the Blockchain Association’s letter to the Internal Revenue Service, DeFi’s whole point is to develop trustless financial systems by using smart contracts as well as automation to hinder a project’s developer from controlling or accessing users’ data and finances.
The crypto lobbying group said that attempts to connect wallet addresses to individual identities would develop an irreversible and grave privacy problem for the users. The situation is similar to possessing a lifetime of online credit card transactions, which means disclosing every user’s transaction history to everyone.
Blockchain Association Hails Public for Inquisitive Comments Regarding Tax Regulations
The Blockchain Association concluded that it is not hard to comprehend that such an outcome is unacceptable. The suggested rule by the Internal Revenue Service has been available for public comment for 74 days. In that time, it has acquired more than 124,000 public comments. The Internal Revenue Service held a public hearing concerning the regulation and will afterward decide on its implementation.
At the hearing, Marisa claimed that regulators were ‘engaged and asked thoughtful queries that indicated they were considering the concerns related to nonfungible tokens, decentralized technology, and stablecoins. Concerning the proceedings, she claimed she was thoughtfully optimistic.