Crypto Exchanges Under IRS Radar: New Treasury Proposal Demands Detailed Transaction Reports

The US Treasury Department has recently published a proposed rule requiring cryptocurrency brokers, including exchanges and payment processors, to report user information regarding sales and exchanges of digital assets to the Internal Revenue Service (IRS).

According to a CNBC report, the move is part of a broader effort by Congress and regulatory authorities to crack down on tax evasion within the crypto space. The proposed rule aims to simplify tax reporting for cryptocurrency users while subjecting digital asset brokers to the exact information reporting requirements as brokers in traditional financial markets.

Crypto Exchanges Brace For New IRS Reporting Rule

The proposed rule introduces a new tax reporting form called Form 1099-DA, which would assist taxpayers in determining their tax liabilities. By providing comprehensive information on users’ cryptocurrency transactions, the form aims to alleviate the “complexities” associated with calculating gains.

Per the report, the US Treasury Department believes that this streamlined approach will help individuals meet their tax obligations more efficiently.

Under the proposed rule, a “broker” would encompass centralized and decentralized crypto trading platforms, crypto payment processors, and specific online wallets that store digital assets.

According to CNBC, this approach ensures that a wide range of entities facilitating cryptocurrency transactions are subject to the reporting requirements.

Moreover, the rule would cover popular cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH), as well as non-fungible tokens (NFTs).

Furthermore, the proposed rule not only aligns reporting obligations for crypto brokers with those for brokers in traditional financial markets, such as stocks and bonds, but also extends reporting requirements for cash transactions exceeding $10,000 to digital assets.

According to the Biden administration, these measures aim to enhance transparency and reduce the potential for tax evasion within the digital asset ecosystem.

The proposed rule results from the $1 trillion Infrastr

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Author: Ronaldo Marquez

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