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US Treasury Finalizes New Cryptocurrency Tax Reporting Rules
By Hannah Lang
(Reuters) – The U.S. Treasury Department on Friday finalized a rule requiring cryptocurrency brokers, including exchanges and payment processors, to report new information about users’ sales and trades of digital assets to the Internal Revenue Service.
The new requirements are aimed at cracking down on cryptocurrency users who might default on their taxes and come from the bipartisan, $1 trillion Infrastructure Investment and Jobs Act of 2021. At the time the bill passed, the new rules were estimated to raise nearly $28 billion over a decade.
The rule, which will be phased in starting next year for the 2026 tax filing season, aligns tax requirements for cryptocurrencies with existing tax reporting requirements for brokers of other financial instruments, such as bonds and stocks, he said the treasure.
The final rule was modified from Treasury’s original proposal to limit some burdens on brokers and phase in the new requirements, Treasury officials said. It also includes a $10,000 threshold for reporting transactions involving stablecoins, a type of cryptographic token typically pegged to an asset such as the US dollar.
The cryptocurrency industry waged a comment letter campaign after Treasury proposed the rule last year, arguing that the scope of the proposal’s definition of a broker was too broad and that the requirements violated the privacy of cryptocurrency owners.
The Treasury said it had reviewed more than 44,000 comments on the proposal. It also said it plans to issue additional regulations later this year to establish tax reporting requirements for non-custodial brokers, including decentralized cryptocurrency exchanges.
In a statement, the Treasury stressed that cryptocurrency holders “have always had to pay taxes on the sale or exchange of digital assets” and that the new rule “simply created reporting requirements… to help taxpayers file accurate returns and pay the taxes they owe under existing law.”
According to the Treasury Department, the rule introduces a new tax return form called Form 1099-DA, designed to help taxpayers determine whether they owe taxes and to help cryptocurrency users avoid having to perform complicated calculations to determine their earnings.
Brokers should submit forms to both the IRS and digital asset holders to assist them in tax preparation.
The IRS currently requires cryptocurrency users to report many digital asset-related activities on their tax returns, regardless of whether the transactions resulted in gain. Users are required to make this calculation themselves, and the platforms on which digital assets are traded do not provide this information to the IRS.
(Reporting by Hannah Lang in New York; Editing by Andrea Ricci)