According to CoinDesk: The U.S. Treasury Department's new proposal on digital asset taxation has been met with immediate criticism from the crypto industry. The proposal, which is entering a months-long period of public comments and hearings, has raised concerns about its scope and the tax-reporting demands it may place on decentralized crypto operations.

Miller Whitehouse-Levine, CEO of a decentralized finance (DeFi) lobbying group, expressed concerns on social media about the proposal's overbroad provisions, which could potentially capture various entities, including self-hosted wallets. Critics also pointed out that wallet providers like Metamask, decentralized exchanges like Uniswap, and smart contracts with multisignature security setups might be subject to the reporting requirements, forcing them to develop new know-your-customer rules for users.

Kristin Smith, CEO of the Blockchain Association, acknowledged that the rules must be tailored to the unique nature of the crypto ecosystem and not capture participants without a pathway to compliance. However, she also noted that if implemented correctly, the rules could help provide everyday crypto users with the necessary information to accurately comply with tax laws.

The crypto industry has until October 30 to voice their objections to the Treasury and Internal Revenue Service, followed by public hearings on November 7 and 8. The proposal's authors have included language inviting ideas from the crypto sector. One positive aspect of the proposal is that it generally excludes crypto mining operations, which had been a concern when the 2021 infrastructure law mandated the tax rules.