The Blockchain Association has expressed strong objections to the Internal Revenue Service's (IRS) proposed broker rule, citing an excessive burden on brokers and a significant cost to comply. The association argues that the rule, aimed at enhancing tax compliance for cryptocurrency transactions, would result in an undue burden on brokers and a substantial cost to the industry.

The proposed rule would require brokers to submit over 8 billion forms, which the Blockchain Association estimates would take over 4 billion hours to complete, equivalent to a third of the total paperwork burden imposed by the federal government. This would result in a significant cost of over $254 billion, far exceeding the potential tax revenue of $10 billion.

The Blockchain Association believes that the IRS has underestimated the time and costs required for brokers to comply with the rule. The association's official, Marisa Tashman Coppel, noted that the proposed rule fails to meet the requirements of the Paperwork Reduction Act (PRA), which aims to minimize the public burden of regulatory obligations.

The IRS's proposed rule and the associated Form 1099-DA have also drawn criticism from other industry experts. Jake Chervinsky, Chief Legal Officer at Variant Fund, has hinted at the possibility of a lawsuit against the IRS, while Perianne Boring, CEO of the Chamber of Digital Commerce, has expressed support for the IRS's initiative to extend regulatory scope to unhosted wallets and consolidate know-your-customer (KYC) rules.

In conclusion, the Blockchain Association's critique of the IRS's proposed broker rule highlights the need for a more balanced approach to regulating cryptocurrency transactions. While tax compliance is essential, it should not come at an excessive cost to the industry. The IRS must reconsider its proposal and engage with industry stakeholders to find a more practical solution.