U.S. Treasury Finalizes Crypto Tax Reporting Rules

US Treasury finalizes new crypto tax reporting rules

The U.S. Treasury Department has finalized a new rule that mandates cryptocurrency brokers, including exchanges and payment processors, to report detailed information on users' sales and exchanges of digital assets to the Internal Revenue Service (IRS). This is part of the ongoing effort to ensure crypto users pay the taxes they owe.

The rule, which stems from the bipartisan $1 trillion Infrastructure Investment and Jobs Act passed in 2021, aims to address concerns of tax evasion in the rapidly growing crypto market. It is expected to generate approximately $28 billion over the next decade. Starting in 2026, the new requirements will align cryptocurrency tax reporting with the existing regulations for traditional financial instruments such as stocks and bonds.

In response to feedback, the Treasury modified the initial proposal to ease some burdens on brokers and phase in the reporting requirements. Notably, the rule includes a $10,000 threshold for transactions involving stablecoins, a type of cryptocurrency typically pegged to assets like the U.S. dollar.

The Treasury also introduced Form 1099-DA, a new tax reporting form designed to help taxpayers determine their tax obligations, simplifying the process and reducing the need for complex calculations.

Treasury officials noted that crypto owners have always been required to pay taxes on digital asset transactions, and this rule simply establishes clearer reporting guidelines to assist in accurate tax filing.

Additionally, the Treasury plans to issue further guidelines later this year to address tax reporting for non-custodial brokers, including decentralized crypto exchanges.