(IntegrityTimes.com) – Friday June 28, U.S. Department of the Treasury and the Internal Revenue Service (IRS) has announced the final rule requiring cryptocurrency brokers to report the details of all digital asset transactions.
These new regulations are to be implemented in 2026 for all sales that took place in 2025. Brokers will have to report all pertinent information about the tax basis for certain digital assets starting in 2027 for all sales during 2026. The term tax basis refers to the price that was originally paid for the digital assets. The tax basis is used to figure out what taxes that may be owed following a sale.
These new rules do not affect everyday taxpayers as they are focused solely on cryptocurrency brokers. In fact, these new regulations may help taxpayers who have previously relied on costly third-party services in order to determine what their gains or losses are. The changes mean that the brokers will be required to provide this information directly to the taxpayers. IRS Commissioner Danny Werfel indicated the new rule is part of a larger effort to make sure digital assets are not being used to hide taxable income particularly for high-income individuals.
While for many the changes are very welcome, there has been some resistance from various organizations. Cboe Global Markets was not alone when they criticized the rule’s overly broad definition of broker. Under the new regulations, brokers could refer to certain digital asset trading platforms or payment processors, and even hosted wallet providers. There was also pushback from the U.S. Chamber of Commerce who said the start date of Jan. 1, 2025, doesn’t allow enough time to develop the necessary systems to implement the now mandatory reporting.
The new regulations do not apply to brokers who do not actually take possession of the digital assets when they are being exchanged. Some terms for these sorts of brokers are decentralized or non-custodial brokers. Those brokers shouldn’t get too used to this state of affairs, though, as the IRS and the Treasury have plans to create rules especially for them in the future. While this may be a seismic change for brokers of various kinds, everyday citizens have already been required to report all of their cryptocurrency and digital asset incomes when they file taxes.
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