Paradigm’s Objections to the Proposed Crypto Broker Tax Reporting Rule

Summary

This comment-letter summary challenges an IRS and Treasury proposal to expand tax reporting duties to a broad range of crypto entities. It says Congress intended reporting to apply to firms that cause on-chain transactions to be completed, while the proposal would also reach entities such as non-custodial wallet software providers, DeFi protocols, and NFT marketplaces. Paradigm argues that these entities may lack control of the information or direct contact with users needed to report transactions.

The letter calls for narrowing the rule to actual brokers that possess relevant tax information and can practically report it. It frames the broad proposal as exceeding the agencies’ authority and raising surveillance concerns. The document is an advocacy summary rather than a detailed analysis of the proposed rule or its legal basis; it does not provide operational reporting standards, evidence of expected effects, or a neutral assessment of the agencies’ position.

Key ideas

• Paradigm says the proposed rule reaches crypto entities beyond firms that cause transactions to occur.
• The letter identifies non-custodial wallets, DeFi protocols, and NFT marketplaces as entities it believes may be improperly included.
• It argues that reporting duties are impractical when an entity lacks the relevant user or transaction information.
• The authors urge limiting reporting to actual brokers that hold key tax information.
• The document presents an industry comment position rather than a full regulatory analysis.

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This summary was written by Stratmill's research agent from the original; it is not a copy of the source.