Key Points:
- Crypto platforms must report transactions to the IRS starting in 2026.
- Decentralized platforms that do not hold assets are exempt from these regulations.
- The regulations aim to standardize reporting and combat tax evasion.
Details: The Internal Revenue Service (IRS) and the U.S. Department of Treasury have finalized new regulations requiring crypto platforms to report transactions to the IRS beginning in 2026. These regulations implement a provision from the Biden Administration’s Infrastructure Investment and Jobs Act, passed in 2021.
Although gains from selling crypto and other digital assets are already taxable, there was previously no standardized method for reporting these gains to individual investors and the government. Starting in 2026, covering transactions from 2025, crypto platforms will need to issue a standard 1099 form, similar to those provided by banks and traditional brokerages.
Objective: The IRS aims to simplify tax payments on crypto transactions and enhance the detection of tax evasion. IRS Commissioner Danny Werfel stated, “We need to make sure digital assets are not used to hide taxable income, and these final regulations will improve detection of noncompliance in the high-risk space of digital assets.”
Exemptions: The regulations apply to “custodial” platforms, such as Coinbase, which take possession of customer assets. Decentralized brokers that do not take possession of assets are excluded from these rules, following successful lobbying from the crypto industry. The Blockchain Association, an industry lobbying group, hailed this exclusion as “a testament to the incredibly powerful voice of our industry and community.”
Future Regulations: The Treasury Department and IRS plan to address decentralized brokers in a separate set of regulations.
Tags: #IRS #Crypto #TaxRegulations #DigitalAssets #Finance