Coinbase, America’s largest crypto exchange, has argued that a proposal made by the U.S. Internal Revenue Service (IRS) is a threat to the privacy of American citizens. The IRS proposed a new rule to define crypto brokers formally and provide instructions on how they can pay taxes for themselves and their clients. Coinbase expressed their opinion in a letter of comment to the agency on Thursday, stating that the proposed rule creates “an unprecedented, unchecked, and unlimited tracking on the daily lives of Americans.” According to Lawrence Zlatkin, Vice President of Tax for Coinbase Global Inc., these rules would “establish an incomprehensible and unduly burdensome set of new reporting requirements that will degrade and displace the same taxpayer services the IRS is seeking to improve.”

The Blockchain Association, a group advocating for crypto in the U.S., previously stated that the adoption of these provisions could potentially kill the industry. Hours before the letter from Coinbase, the Treasury Department had proposed a nearly 300-page regulation in compliance with the 2021 deadline set by the Infrastructure Investment Jobs Act. This regulation outlines the reporting obligations of centralized crypto exchanges, payment processors, hosted wallet providers, decentralized exchanges, and people who redeem crypto tokens.

Last week, Sen. Elizabeth Warren (D-Mass.) and other Democratic senators sent a letter to the IRS advising the agency to reject the industry’s complaints. The senators argued that the proposed rules could take too long to go into effect, thus “disadvantaging law-abiding Americans and causing the federal government to lose out on billions of dollars in tax revenue.” Coinbase is now asking the IRS to rewrite their proposal “to limit compliance requirements to those parties that directly effectuate transactions in digital assets similar to those in traditional finance.” The agency must consider public feedback until October and wait 30 days before making a final ruling.