July 2, 2024
By Anjali Kochhar
The Internal Revenue Service (IRS) and the United States Department of Treasury have finalized new regulations that require cryptocurrency platforms to record transactions beginning in 2026. This action implements a component of the Biden Administration’s Infrastructure Investment and Jobs Act, which was passed in 2021.
Under the new regulations, gains from selling crypto and other digital assets, which were already taxable, will now be standardized in terms of reporting. Starting in 2026, covering transactions from 2025, crypto platforms must provide a standard 1099 form, akin to those used by banks and traditional brokerages. This aims to streamline tax payments on crypto transactions and enhance transparency.
IRS Commissioner Danny Werfel emphasized the need for these regulations to prevent tax evasion in the digital asset space. “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,” Werfel stated.
However, the regulations specifically target “custodial” platforms like Coinbase, which take possession of customer assets. Decentralized platforms that do not hold assets are exempt from these new rules, following successful lobbying efforts from the crypto industry. The Blockchain Association, a prominent industry lobbying group, hailed this exclusion as a significant victory, reflecting the powerful advocacy of the crypto community.
The Treasury Department and IRS have indicated that they will address decentralized brokers in a separate set of regulations, ensuring comprehensive oversight of the crypto market.
These new laws are part of a larger attempt to regulate the quickly developing and often opaque digital asset market, with the goal of fostering a more transparent and compliant financial ecosystem.
About the author
Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.
