US Treasury Proposes Crypto Transaction Reporting Rules to IRS

A fresh proposal from the Treasury Department will mandate cryptocurrency exchanges and payment processors within the United States to disclose details regarding the transactions conducted by their users to the Internal Revenue Service, reports Finextra..

The intent behind these regulations is to tackle the potential for tax evasion associated with digital currencies. The Joint Committee on Taxation estimates that these regulations could generate around $28 billion in revenue over the course of a decade.

According to the proposed regulations, various entities dealing with cryptocurrencies, including centralized and decentralized exchanges, payment processors, and specific hosted wallets, will need to furnish a novel tax reporting document referred to as Form 1099-DA. This form will assist taxpayers in determining their tax liabilities. The scope of these regulations encompasses cryptocurrencies such as Bitcoin and Ether, along with non-fungible tokens (NFTs).

This newly introduced form will encompass data related to customers' capital gains and losses. It will be shared with both the customers themselves and the IRS. The intention is to align cryptocurrency reporting with the information disclosure protocols applicable to securities and other financial instruments.

The initial implementation of these regulations would require brokers to start reporting information concerning the sales and exchanges of digital assets from the year 2026 onward.