Finalized rules on tax reporting for crypto brokers issued by US Treasury and IRS

The final regulations defining the new reporting requirements for digital asset brokers were released by the US Treasury and IRS on June 28.

Starting from 2026, crypto brokers, including exchanges, will be required to report gross proceeds for crypto sales, encompassing sales made during 2025. Additionally, brokers will need to report the tax basis information of certain cryptos for sales in 2026, starting in 2027.

The regulations aim to align the rules for crypto brokers with those for traditional financial brokers, without affecting taxpayers’ obligations. The Treasury clarified that tax has always been owed on the sale or exchange of digital assets.

These new rules are part of the Biden-Harris Administration’s implementation of the bipartisan Infrastructure Investment and Jobs Act (IIJA), focusing on reporting requirements rather than imposing new taxes on crypto.

The regulations primarily pertain to custodial brokers, with rules for non-custodial brokers expected to be issued by the end of the year to comply with statutory requirements.

Benefits to investors and the IRS

Acting Assistant Secretary for Tax Policy Aviva Aron-Dine mentioned that crypto investors will have easier access to the required documentation for tax filings, eliminating the need for expensive third-party services to calculate gains and losses. This will align with Congress’ bipartisan directive.

Additionally, the IRS will gain access to crucial information to mitigate risks associated with tax evasion in the crypto sector, particularly among affluent investors.

Earlier resistance from the industry

After considering over 44,000 comments and conducting public hearings, the Treasury and IRS finalized the rules, modifying them from their initial versions. The final requirements are designed to reduce burdens on brokers, introduce requirements gradually, and establish a $10,000 threshold for stablecoin transaction reporting.

Reuters reported that the industry had raised concerns about privacy and the broad definition of brokers in the requirements, with companies like Coinbase expressing opposition due to the perceived invasion of users’ privacy and the imposition of onerous reporting rules in October 2023.

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