The U.S. Treasury Department on Friday finalized a rule requiring cryptocurrency broker-dealers, including exchanges and payment processors, to report new information on digital asset sales and trades made to the Internal Revenue Service by users.
These new requirements are intended to crack down on cryptocurrency users who may not pay their taxes and stem from the bipartisan 2021 Infrastructure Investment and Jobs Act, amounting to 1 trillion dollars. At the time the law was passed, it was estimated that the new rules could raise nearly $28 billion over a decade.
The rule, which would be phased in starting next year for the 2026 tax filing season, aligns tax requirements for cryptocurrencies with existing tax reporting requirements for brokers for other instruments financial assets, such as bonds and stocks, Treasury said.
The final rule was modified from Treasury’s initial proposal to limit some burdens on broker-dealers and introduce the new requirements in stages, 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 U.S. dollar.
The cryptocurrency industry led a campaign of comment letters after the Treasury proposed the rule last year, arguing that the scope of the definition of a broker was too broad and that the requirements violated the privacy of cryptocurrency owners.
The Treasury said it reviewed more than 44,000 comments on the proposal. It also said it plans to issue additional rules later this year to establish tax reporting requirements for noncustodial broker-dealers, including decentralized cryptocurrency exchanges.
In a statement, the Treasury emphasized that owners of cryptocurrencies “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 taxes due under current law.”
The rule introduces a new tax reporting form called Form 1099-DA, intended to help taxpayers determine whether they owe taxes, and would allow cryptocurrency users to avoid having to do complicated calculations to determine their gains, according to the Treasury Department.
Brokers will need to send the forms to both the IRS and digital asset holders to help them prepare their tax returns.
The IRS currently requires cryptocurrency users to report many activities related to digital assets on their tax returns, regardless of whether the transactions resulted in a gain. Users must 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; Writing by Andrea Ricci)
