The Blockchain Association, a United States-based cryptocurrency advocacy group, has submitted a comment letter mainly in opposition to tax regulations proposed by the Internal Revenue Service (IRS).

In a Nov. 13 letter, the Blockchain Association (BA) said proposed IRS rules introduced in August aimed at regulating the sale and exchange of digital assets by brokers exceeded the government body’s authority and reflected “fundamental misunderstandings about the nature of digital assets and decentralized technology.” The U.S. Treasury Department released a draft of the proposed rules in August, attempting to address difficulties in reporting and paying taxes on crypto transactions.

The Blockchain Association’s criticism of the proposal included claims many participants in the crypto space would have difficulty complying with the regulations if enacted. The group said many involved in decentralized finance (DeFi) were “fundamentally unable to comply” with the regulations as proposed, which the BA alleged represented the Treasury overstepping its authority and potentially violating constitutional rights to privacy and freedom of expression.

“The Treasury Department should take additional time to understand how damaging and impractical the expanded broker definition would be to developers of decentralized technology in the U.S.,” said BA CEO Kristin Smith. “Not only that, but Treasury’s proposal constitutes an infringement on the privacy rights of individuals using decentralized technology.”

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Since the release of the draft in August, many U.S. lawmakers, industry leaders and legal experts have weighed in on what the proposal could mean for the future of crypto taxation in the country. Under the current draft, the proposed rules on reporting crypto could go into effect in 2026 for transactions conducted in 2025.

In October, Coinbase chief legal officer Paul Grewal claimed the rules could “threaten to harm a nascent industry when it’s just getting started.“ A group of U.S. senators has supported the measure as written, calling on the regulations to be enforced before 2026.

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