IRS proposal to track your Uniswap transactions will dampen the crypto industry

Published

2 years ago

November 30, 2023

admin

The United States Internal Revenue Service (IRS) is considering a proposal that would have sweeping consequences for the cryptocurrency industry. Investors should be concerned, because it could significantly impact the way that individuals — both inside and outside America — are allowed to engage with digital assets.

The IRS is proposing an initiative under Section 6045 of the tax code to establish new tax rules for the treatment of cryptocurrency providers. Specifically, the agency is seeking to amend the law to expand the definition of “brokers” to include nearly all crypto-service providers — including, for instance, decentralized exchanges (DEXs) and wallet providers. Those providers would be required to collect personal information from users beginning in 2025, and to begin sending (a still-unreleased) Form 1099-DA to the IRS in 2026. It would be a crypto-focused version of the 1099-MISC.

The IRS’s move to redefine “broker” is not just a regulatory tweak but a fundamental shift that could reshape the entire U.S. cryptocurrency landscape. By potentially including a wide array of cryptocurrency service providers under this definition, the IRS is extending its reach significantly. This expansion means that many more entities involved in digital asset transactions, from wallet providers to small-scale developers, could be required to report user information and transaction details to the government.

*Example of a Form 1099-MISC. Source: Glassnode*

For users and investors in the cryptocurrency space, this change could translate into increased reporting and compliance obligations — rolling back the anonymity and flexibility they currently offer users. For service providers, it would require the adoption of new systems and procedures for compliance, requiring them to ask users for their personal information. While the IRS is technically attempting to target American users, service providers would have no way to determine nationalities before harvesting user data.

The move would be a decisive step toward bringing the world of digital assets in line with traditional financial systems in terms of regulatory oversight and transparency. It’s crucial that the average American understand the proposal’s implications, because it represents a significant pivot point in how digital assets are perceived and managed by regulators.

The industry’s response

The industry’s response to these regulatory changes has been marked by concern and proactive engagement. Major players have expressed apprehensions about the intrusion into personal privacy, including Coinbase, whose chief legal counsel Paul Grewal, noted the change would “set a dangerous precedent for surveillance of the everyday financial activities of consumers by requiring nearly every digital asset transaction — even the purchase of a cup of coffee — to be reported.”

At their core, the proposed regs go well beyond the congressional mandate to establish tax reporting rules on par with those for traditional finance, putting digital assets at a disadvantage and threatening to harm a nascent industry when it’s just getting started. 2/4

— paulgrewal.eth (@iampaulgrewal) October 18, 2023

The broader industry is similarly concerned about the possibility of regulations stifling the growth of digital assets. A primary issue is the appropriate application of conventional regulatory frameworks to decentralized systems, ensuring investor privacy protection and fostering an environment that supports innovation while maintaining market stability.

The change would have profound implications for individual investors and developers within the cryptocurrency realm. For investors, clearer regulatory guidelines could bolster market confidence, potentially leading to increased investment activity. However, excessively strict regulations risk curbing innovation and reducing the appeal of cryptocurrencies as an alternative to traditional financial systems. For developers, especially those in the DeFi sector, these regulatory shifts present both compliance challenges and opportunities to influence the development of rules that recognize the unique capabilities of blockchain technology.

Navigating the complexities of these regulatory proposals necessitates a balanced approach. The cryptocurrency industry must proactively engage with regulators to ensure the creation of fair, practical, and innovation-friendly regulations. Balancing regulatory oversight with the preservation of the ecosystem’s core values is crucial for the future of digital finance. The industry’s capacity to adapt to these regulatory changes while retaining its innovative essence is pivotal.

The requirement for regulatory adaptability and industry evolution is more apparent than ever. The cryptocurrency sector is encouraged to evolve its practices to meet emerging regulatory standards while preserving its innovative and decentralized nature. Simultaneously, regulators are challenged to comprehend the unique aspects of digital assets and decentralized systems to devise effective, sensible, and forward-thinking regulations.

Lobbying and political contributions

The cryptocurrency industry’s involvement in lobbying and political contributions has become increasingly significant. In 2022, the industry’s lobbying efforts and political contributions skyrocketed, reflecting its growing interest in shaping regulatory frameworks. This political engagement is a clear indicator of the industry’s commitment to influencing policy decisions that will affect its future. It also highlights the need for a regulatory environment that understands and accommodates the unique characteristics of digital assets and blockchain technology.

Expanding the definition of “broker” would stifle innovation for the industry, but particularly on American soil. The cryptocurrency community’s resilient response, advocating for fair and supportive regulatory measures, underscores the delicate balance between effective regulation and fostering technological progress.

As the industry actively participates in shaping these regulations, its involvement is crucial to ensuring the U.S. cryptocurrency sector continues to thrive in a competitive global landscape, balancing regulatory compliance with innovation and growth.

Tomer Warschauer Nuni is the chief marketing and business development officer at Pink Moon Studios. With more than two decades of experience in tech, gaming, and blockchain, Tomer is an adept early-stage investor and startup advisor for projects including ChainGPT and GT-Protocol. He holds degrees in governance and communication from Reichman University.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Politics

Starmer says Lammy ‘setting out facts to best of his knowledge’ on prisoner releases

Published

4 hours ago

November 7, 2025

admin

Starmer says Lammy 'setting out facts to best of his knowledge' on prisoner releases

Sir Keir Starmer has said David Lammy “set out the facts” on mistaken prisoner releases “to the best of his knowledge” amid questions over what the justice secretary knew and when.

Speaking for the first time since it emerged two prisoners were wrongly freed from HMP Wandsworth, the prime minister also said the situation was “intolerable” and that he was “angry and frustrated”.

The Met Police announced on Wednesday afternoon that registered sex offender Brahim Kaddour-Cherif, an Algerian national, had been released in error on 29 October. He is still at large.

A few hours later it was revealed another prisoner, 35-year-old William “Billy” Smith, had been wrongly released on Monday – the same day he was convicted for multiple fraud offences and handed a 45-month jail term. He has since handed himself in.

Asked how the public can have confidence in the justice system, Sir Keir said: “Let me just say how angry and frustrated I am that these mistakes have been made in releasing people. They’re intolerable, and they shouldn’t be made.

“A lot of it comes from the burden and the strain on the system because of the failures of the last government. But I recognise it’s our job to step up and to fix this.”

Sir Keir went on to defend Mr Lammy’s handing of the saga, which comes a week on from the mistaken release of Ethiopian sex offender Hadush Kebatu, who has since been deported.

Mr Lammy declared on 27 October that stronger prison checks in light of the Kebatu fiasco would come into force immediately.

But on Thursday, he said those checks were not in place when Kaddour-Cherif was released two days later.

Asked whether he was being truthful last week or on Thursday, Sir Keir said: “David Lammy can speak for himself on that.

“I’m absolutely clear that he’s setting out the facts, to the best of his knowledge and that’s the right thing for him to do.

“But whatever the checks, it’s intolerable. So, we have to make sure that whatever changes are needed are made.”

Government sources have said the mistakes that triggered the release of Kaddour-Cherif happened at the end of September, before the new regime was put in place.

Meanwhile on Thursday night, the Ministry of Justice (MoJ) announced the rollout of “cutting-edge technology to more prisons” in order to reduce human error and modernise “the archaic processes that have led to mistakes”.

“These measures will build on the tough new checks that were brought in last month, and ensure governor oversight of all releases,” the MoJ said.

Mr Lammy, who is also the deputy prime minister, is facing further criticism for failing to reveal that he knew of Kaddour-Cherif’s release during PMQs on Wednesday, when he was filing in for Sir Keir who is at the COP summit in Brazil.

He was asked repeatedly by Tory leader Kemi Badenoch whether any more asylum seekers had been wrongly released since Kebatu and refused to answer the question. The news broke at the end of PMQs.

On Thursday, Mr Lammy said he did not have all the details in the morning and did not want to mislead the public.

He told broadcasters: “I took the judgment that it is important when updating the House and the country about serious matters like this, that you have all of the details.

“I was not equipped with all of the detail, and the danger is that you end up misleading the House and the general public.

“So that is the judgment I took. I think it’s the right judgment.”

But shadow justice secretary Robert Jenrick said: “David Lammy has either lied or has absolutely no clue what’s going on in his department.

“How can the public have confidence in the justice secretary when he can’t establish a timeline of events or answer basic questions?”

Kaddour-Cherif was serving a sentence at HMP Wandsworth for trespass with intent to steal, but had previously been convicted for indecent exposure.

It is understood he is not an asylum seeker but is in the process of being deported after he overstayed his visa.