Investing in Web 3.0: What You Need to Know About Coinbase’s Legal Chief and IRS Crypto Tax Reporting Rules

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Coinbase crypto exchange chief legal officer Paul Singh Grewal has called upon the crypto community to join the movement against the United States Treasury’s proposed tax reporting regulations on cryptocurrencies. He emphasizes that it could set a dangerous precedent for surveillance and urged the community to oppose the proposed regulations.

Grewal took to X (formerly Twitter) to express his concerns regarding the new crypto tax reporting rules. According to him, the proposed regulations go beyond the congressional mandate to establish tax reporting rules. He believes that if the proposed regulations become a law, it could put “digital assets at a disadvantage and threaten to harm a nascent industry just getting started.“

The U.S. Internal Revenue Service (IRS) released a draft of proposed regulations for crypto tax reporting on Aug. 25. These regulations include centralized and decentralized exchanges, crypto payment processors, certain online wallets, and crypto brokers. The U.S. Treasury Department claims that the new form would simplify the tax filing process and help taxpayers determine if they owe taxes.

If approved, the new tax regime will come into effect in 2026, and the brokers will be required to start reporting 2025 transactions in January 2026 via Form 1099-DA. However, many U.S. lawmakers are urging the IRS to implement crypto tax reporting requirements before 2026 to make money in web 3.0.

Web 3.0: A New Opportunity for Investment

The Treasury Department recently proposed crypto tax reporting rules that would supposedly align digital assets with traditional financial reporting. However, Coinbase’s legal officer, Gurvinder Grewal, has expressed his disagreement with this notion. In his post, Grewal noted that the proposed rules would require the reporting of nearly every digital asset transaction, even the purchase of a cup of coffee, which he believes sets a “dangerous precedent for surveillance of the everyday financial activities of consumers.”

Grewal also argued that the proposed regulations would require the collection of a large amount of user data with no “legitimate public purpose.” He claimed that the data collection would be an unnecessary burden for Web3 startups and an overwhelming amount of data for the IRS to process and analyze.

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