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28 November 20235 minute read

Thousands of comments submitted in response to proposed regulations covering brokers’ tax reporting of cryptocurrency transactions

The IRS and Treasury Department have received tens of thousands of comments in response to their proposed regulations concerning the reporting by “brokers” of tax information relating to digital assets (Proposed Regulations). Released on August 25, 2023, the Proposed Regulations would effectively subject brokers of digital assets to the same information reporting rules as brokers for securities and other financial instruments.

The Proposed Regulations were issued in response to the 2021 Infrastructure Investment and Jobs Act’s (IIJA) expansion of Section 6045 of the Internal Revenue Code to require tax reporting by brokers of transactions involving the sale or exchange of digital assets. See our discussion of the Proposed Regulations in a previous edition of Blockchain and Digital Assets News and Trends.

Below, we highlight the main subject areas addressed by the comments submitted in response to the Proposed Regulations, and the perspectives they offer from stakeholders in the cryptocurrency sector.

Request for comments

In the preamble to the Proposed Regulations, the IRS and Treasury provided: “Comments are requested on all aspects of these proposed regulations, including the following:” – wherein the IRS and Treasury listed 49 different questions. The deadline for comments was originally October 30, 2023, but, given the strong reaction to the Proposed Regulations, the comment period for the proposed regulations was extended from October 30, 2023 to November 13, 2023.[1]

In general, the comments received reflect a blend of apprehension and support, indicating the complexity and far-reaching implications of the Proposed Regulations in the evolving landscape of cryptocurrency regulation. The primary thrust of the Proposed Regulations is defining and regulating the role of “brokers” in the cryptocurrency market. However, as a vast number of comments have noted, this effort potentially implicates a wide range of entities involved in digital asset transactions that goes far beyond traditional brokerage firms to include cryptocurrency exchanges, wallet providers, and even decentralized finance (DeFi) platforms.

The feedback on the Proposed Regulations centered on the following:

  • User privacy. A frequently noted concern was the implication of the Proposed Regulations for user privacy. Coinbase, for example, argued that the rules would impose "unprecedented, unchecked, and unlimited tracking" on Americans' daily lives, raising concerns about government surveillance of private transactions.[2]
  • Scope of entities covered by the definition of “broker”. Although the Proposed Regulations set some clear limits on the IIJA’s definition of “broker” (for example, carving out those engaged purely in mining or staking of cryptocurrency), the comments make clear the significant unease that remains about the breadth and scope of the Proposed Regulations’ definition of “broker.” A typical concern was voiced by the DeFi Education Fund (DEF), which argued in its comment letter that the Proposed Regulations stretched the IIJA’s statutory language to its breaking point, potentially treating every participant in the blockchain technology stack as a broker.[3]
  • Unreasonable administrative burden Impact on DeFi and other entities. The Proposed Regulations were seen as potentially problematic for DeFi platforms, DAOs, wallet providers, and certain payment processors, which might struggle to provide the required tax information. Americans for Tax Reform (ATR) highlighted that the broad definition of a broker included entities incapable of reporting the necessary transactional information.[4]  The ATR letter concludes by calling into question whether federal agencies may pursue rules that could lead to significant economic and political consequences unless authorized by Congress.[5]
  • Inclusion of stablecoins and securities classification. Comments also focused on the Proposed Regulations’ inclusion of stablecoins as reportable digital assets and the implications for defining digital assets as securities. Nicolas Morgan of the Investor Choice Advocates Network (ICAN) asked for clarification to ensure the rule would not inadvertently classify digital assets as securities for non-tax purposes and called for “the final regulations [to] unequivocally state that they do not apply to federal or state securities laws. Further, the fact that brokers are now required to report on transactions involving digital assets in the same way that traditional brokers have reported on transactions involving securities in no way transmutes digital assets into ‘securities’ under securities laws.”[6]
  • Positive aspects of digital asset tax reporting. Despite a large number of objections, some comments acknowledged the benefits of establishing clear rules for reporting gains and losses, which could reduce uncertainty and possibly broaden interest in cryptocurrencies.

In response to the Proposed Regulations, Senator Elizabeth Warren (D-Mass) and other Democrat senators submitted their own comments, primarily urging the IRS and Treasury to rebuke industry comments calling for changes and to maintain the substance of the Proposed Regulations. A primary concern expressed by these lawmakers is that it would take far too long to incorporate industry comments (comments with which the lawmakers clearly disagree) into a final regulations package, which delay would “disadvantage law-abiding Americans and cause the federal government to lose out on billions of dollars in tax revenue.”[7]  Accordingly, they urged that the Proposed Regulations be finalized as quickly as possible.

We will continue to monitor developments in this area. For more information, please contact either of the authors.


[1] REG-122793-19.
[2] See Coinbase Comment Letter (Coinbase Comment Letter | PDF (
[3] See DEF Comment Letter (2023-11-07 DEF Broker Comment Letter - FINAL .docx (
[4] See ATR Comment Letter (
[5] See id. (citing West Virginia v. EPA, No. 20-1530 (U.S. Jun. 30, 2022)).
[6] See ICAN Comment Letter (
[7] See US Senate Comment Letter 2023.10.10 Letter to Treasury & IRS on Crypto Broker Reporting Rule.pdf (