US Treasury Tables New Tax Guidelines For Crypto Brokerage Platforms
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The US Treasury Department and the Internal Revenue Service (IRS) have released new guidelines for crypto brokerage platforms, including trading platforms, wallet providers, and payment processors. The Treasury Department said the proposed guidelines mandate brokers to report crypto sales and exchange transactions.
US Treasury proposes new crypto tax reporting guidelines
The Treasury Department said that the new regulatory guidelines were part of President Joe Biden’s effort to implement the Infrastructure Investment and Jobs Act. The legislation will also improve infrastructure across the US while creating more jobs.
The proposed regulation is 282 pages long and seeks to address tax evasion. It also plans to help compliant taxpayers determine the amount they owe on a digital asset sale or exchange transaction.
“These proposed rules require brokers to provide a new Form 1099-DA to help taxpayers determine if they owe taxes, and would help taxpayers avoid having to make complicated calculations or pay digital asset tax preparation services in order to file their tax returns,” the US Treasury said.
The Treasury also said that the new regulatory guidelines will see crypto traders subject to the same tax reporting requirements as the brokers dealing in securities and other traditional financial instruments. The policies also align with tax reporting requirements on digital assets while avoiding preferential treatment between different kinds of assets.
The proposed guidelines will not come into effect until 2026. At the time, crypto brokers must report transactions from the previous year for tax purposes. The Treasury Department and the IRS accept public comments on these tax reporting rules until October 30, 2023.
New crypto reporting proposal attracts criticism
The new regulations have drawn criticism from legislatures and industry players. The Chairman of the US House of Representatives Financial Services Committee, Patrick McHenry, has critiqued the proposal, saying that it was another attempt by the Biden administration to attack the digital asset industry.
McHenry took over the leadership position at this Committee in January following the mid-term elections. He opined that the Biden administration needed to end its attempts to kill the digital asset sector across the US and work with Congress to deliver clear guidelines for the industry.
The Chairman also said he would continue pushing a bipartisan solution known as the Keep Innovation in America Act. The solution will address the misguided reporting requirements, safeguard the privacy of market participants, and guarantee the growth of the digital asset space in the US.
Players in the crypto industry are also opposing the new measures. The CEO of DeFi Education, Miller Whitehouse-Levine, said the proposal was confusing and self-refuting. He also said the guidelines sought to locate non-existent financial intermediaries in the crypto industry.
The CEO of Blockchain Association, Kristin Smith, also said that the crypto ecosystem differed from the traditional finance industry. As such, rules needed to be customized so as not to affect ecosystem participants who do not have the means to comply.
