IRS Proposes Guidelines For Crypto Brokers
The US Department of the Treasury and the Internal Revenue Service (IRS) have unveiled a comprehensive set of proposed guidelines outlining the reporting obligations of crypto brokers. The proposal was officially introduced on August 29, 2023, by the US Small Business Administration’s Office of Advocacy.
The US Department of the Treasury and the Internal Revenue Service (IRS) have proposed new guidelines detailing the reporting duties of crypto brokershttps://t.co/BZrQYeM0Yu
— crypto.news (@itscrypto_news) September 7, 2023
Digital Asset Middlemen Reporting
Under the proposed guidelines, scheduled to take effect on January 1, 2025, a new category known as “digital asset middlemen” will encompass various entities, including cryptocurrency trading platforms, payment processors, and specific hosted wallet providers. These digital asset middlemen will be mandated to report the gross proceeds generated from all sales or exchanges involving digital assets.
Furthermore, the proposal specifies that beginning on January 1, 2026, these digital asset middlemen will also be required to report gains and losses incurred during cryptocurrency transactions. The overarching goal of these regulations is to enhance taxpayer compliance while providing the IRS with comprehensive insights into individuals’ cryptocurrency earnings. To ensure that the cryptocurrency industry’s stakeholders have the opportunity to voice their concerns and provide feedback, the Treasury and IRS have announced plans for a public hearing scheduled for November 7, 2023. This hearing will allow small businesses and relevant parties to discuss the potential impact of these regulations on their operations.
Enhancing Tax Compliance
Once these regulations are enacted, crypto brokers operating in the United States will need to submit information returns to the IRS using the newly introduced Form 1099-DA. Additionally, they will be required to furnish payee statements to their clients, further enhancing transparency and tax compliance within the cryptocurrency sector.
Blockchain technology—like #cryptocurrency—could offer faster, cheaper financial transactions. But recent price crashes & bankruptcies have raised concerns about gaps in federal regulations that could put consumers at risk. Our new report & video explore: https://t.co/1vyIgZVaYi pic.twitter.com/nxHrk1g5dQ
— U.S. GAO (@USGAO) July 24, 2023
Read More: Genesis Global Trading Ceases Spot Trading
In a parallel development, the US Government Accountability Office has released a comprehensive 77-page report emphasizing the pressing need for more robust cryptocurrency regulations. The report specifically highlights the spot markets for non-security crypto assets as an area with notable regulatory gaps. It recommends the appointment of a federal regulator to oversee these markets comprehensively, with the aim of mitigating financial stability risks and enhancing user protection in this rapidly evolving sector. This report underscores the growing recognition of the importance of regulatory clarity in the cryptocurrency space, aligning it more closely with traditional asset markets.
