Major Crypto Exchanges Lament Outsized Scrutiny From US IRS
Representatives from Coinbase and Kraken fear that the IRS is overestimating the threat they pose to U.S. regulation.
Representatives of major crypto exchanges today told the United States Internal Revenue Service that they want to see clear regulations rather than vague suspicion from the tax authority.
In a March 3 panel that is a continuation of a broader crypto summit at the IRS building in Washington, D.C., representatives from Coinbase, Kraken, and major accounting firm RSM US LLP argued that the crypto world had experienced outsized scrutiny from regulators compared to its size and darkness.
U.S. crypto exchanges say they aren’t that scary
The representatives from Coinbase — head of global tax information reporting Sulolit Mukherjee — and Kraken — head of global tax Lisa Askenazy Felix — both said that the industry had seen more scrutiny than was merited.
“Even the biggest companies within our space are really not the huge, publicly reported companies right now,” said Askenazy Felix:
“Because it’s such an emerging industry, we are still very much trying to react to all these different developments in all these domestic jurisdictions we might be doing business in and all these foreign jurisdictions we might be doing business in.”
Mukherjee agreed, continuing to affirm that these companies have every reason to cooperate. “There is no benefit to a Coinbase or a Ripple to not doing the right thing,” he said.
The Coinbase executive continued to say that they were seeing excessive pushback from regulators, quipping that “Tax people are not always the most welcoming people in business conversations.”
Overregulation and a lack of clarity
Agreeing with the crypto executives was Jamison Sites of RSM. “All the big players in this industry — Coinbase, Kraken — they’re very much startup companies,” Sites said.
“We’ve seen a number of our clients, we’ve seen a number of non-clients who talk to us — it’s hitting their bottom lines.”
Sites offered a hypothetical instance of overregulation: “Imagine if email in the 80s, when all these startups were coming in, imagine that the US Postal Service came in and said ‘hey, this is unlawful delivery.’”
Askenazy Felix summarized, “I think most of us in the room would agree that there is no clarity today.”
This panel on crypto exchanges is part of a broader March 3 event that the IRS initially invited crypto advocates to in mid-February.