Coin Center has announced two significant victories in its ongoing efforts to protect the rights of cryptocurrency developers and users. The organization successfully appealed a case against the Treasury Department's 6050I reporting scheme, and the IRS released a new draft tax reporting form for cryptocurrency brokers that omits the controversial "unhosted wallet provider" designation.
In the appeal against the 6050I reporting scheme, Coin Center and its co-plaintiffs won their case at the Sixth Circuit Court. The appeal challenged a district court's dismissal based on standing and ripeness grounds. This victory allows them to return to district court to argue that extending 6050I cash and coin reporting requirements to crypto transactions over $10,000 violates First and Fourth Amendment rights.
The Court of Appeals ruled in favor of Coin Center on standing, noting that “the very disclosure of the information required by § 6050I is injurious.” Coin Center meticulously described why they would be subject to the law, learning from past civil libertarian challenges such as California Bankers Association v. Shultz. The court also decided that their challenge was ripe for consideration despite delays from the IRS in implementing guidance.
Regarding ripeness, Coin Center argued that uncertainty around IRS implementation imposed undue burdens on crypto users seeking compliance. The appeals court agreed, ruling that First Amendment, Fourth Amendment, and Enumerated Powers claims were ripe for immediate consideration.
Separately, the IRS issued a new draft third-party reporting form for cryptocurrency brokers without an "unhosted wallet provider" checkbox. This follows long-standing advocacy from Coin Center against treating noncustodial entities like software developers as brokers for tax purposes. While custodial exchanges received final guidance earlier this year, non-custodial entities are still awaiting clear regulations.
Coin Center expressed cautious optimism about these developments but emphasized continued vigilance against unconstitutional surveillance obligations.
