Oct. 17, 2023
I am writing to express my concern and opposition to the proposed amendments regarding the definition of “broker” under section 6045©(1) of the Internal Revenue Code. I believe that the proposed amendments are unnecessary, overreaching, and harmful to the innovation and growth of the digital asset industry. Here are some of the main reasons why I oppose the proposal: The proposed amendments would expand the definition of “broker” to include any person who, for consideration, is responsible for and regularly provides any service effectuating transfers of digital assets on behalf of another person. This definition is too broad and vague, and would cover many types of entities that do not have the access, authority, or ability to report information on digital asset transactions, such as decentralized platforms, software developers, validators, miners, and wallet providers. These entities do not act as intermediaries or custodians for their users, but rather provide technical services that enable users to transact directly with each other. The proposed amendments would impose significant reporting and compliance burdens on these entities, which would be costly, impractical, and ineffective. These entities would have to collect and verify the identity and tax information of their users, which would violate their privacy and security rights. These entities would also have to track and report the cost basis and fair market value of every digital asset transaction, which would be difficult or impossible to determine, especially when multiple digital assets are involved or when digital assets are exchanged for goods or services. These entities would also have to deal with complex issues such as hard forks, airdrops, staking rewards, mining income, and other events that may affect the ownership or value of digital assets. The proposed amendments would stifle the innovation and growth of the digital asset industry, which is one of the most dynamic and promising sectors of the economy. The proposed amendments would create legal uncertainty and regulatory barriers for existing and emerging participants in the industry, which would discourage them from developing new products and services that benefit consumers and society. The proposed amendments would also create competitive disadvantages for U.S. entities in the global market, as they would face more stringent and burdensome requirements than their foreign counterparts. Therefore, I urge you to withdraw the proposed amendments and reconsider your approach to regulating the digital asset industry. I suggest that you adopt a more balanced and nuanced framework that recognizes the diversity and complexity of the industry, respects the rights and interests of its participants, and fosters its innovation and growth. Thank you for your attention to these matters. Sincerely,