Crypto News – What Do the IRS’s New Crypto Broker Rules Mean for You?

Crypto News – IRS Finalizes New Crypto Broker Reporting Rules

Crypto News – On June 28, the United States Internal Revenue Service (IRS) revealed its final draft of the new crypto broker reporting requirements. In a significant clarification, the IRS stated that decentralized exchanges and self-custody wallets will not be subject to these new reporting rules. The agency acknowledged the widespread comments and complaints from industry participants, stating that they needed “more time to consider the nuances” of fully decentralized networks.

Stablecoins and Tokenized Assets Included

However, stablecoins and tokenized real-world assets did not receive the same exemption and will be treated like other digital assets under the new reporting requirements. IRS Commissioner Danny Werfel emphasized the importance of closing the tax gap caused by digital assets and potential noncompliance by high-net-worth individuals.

We need to make sure digital assets are not used to hide taxable income, and these final regulations will improve detection of noncompliance in the high-risk space of digital assets. Our research and experience demonstrate that third-party reporting improves compliance.

This sentiment was echoed by Guy Ficco, the IRS’s criminal investigation chief, who had earlier predicted a rise in crypto tax evasion during the 2024 tax season.

Industry Advocates Raise Concerns

The new rules have faced significant pushback from industry advocacy groups such as The Blockchain Association and The Chamber of Digital Commerce. Throughout 2023, The Blockchain Association objected to the IRS’s proposed broker reporting requirements, arguing that they were fundamentally incompatible with decentralized finance networks.

More recently, The Blockchain Association reiterated its concerns, citing the undue regulatory burdens and compliance costs these rules would impose on market participants, industry firms, and the IRS itself. The group argued that the rules violated the Paperwork Reduction Act and estimated the annual compliance costs could reach $256 billion.

Shortly after The Blockchain Association raised these concerns, The Chamber of Digital Commerce echoed their complaints, highlighting potential privacy issues that could arise from filing billions of 1099-DA tax forms.

FAQ on IRS Crypto Broker Reporting Rules

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