U.S. cryptocurrency exchanges such as Coinbase and Kraken will be required to disclose detailed information about their clients' transactions to the IRS, the latest effort by Washington, D.C., to rein in crypto as a whole.
Treasury and the IRS proposed new regulations on Friday that would offer additional guidelines around 2021 reporting rules designed to curb crypto-related tax evasion by providing additional transparency. The new rules would require platforms facilitating the buying and selling of digital assets such as cryptocurrency to track critical information, such as capital gains or losses. The requirements would treat the platforms similarly to stock or bond brokers.
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According to the Joint Committee on Taxation, the proposal would also raise up to $28 billion in additional revenue.
The proposal would redefine "brokers" in this instance to include both centralized and decentralized digital asset trading platforms, as well as cryptocurrency payment processors and online wallets used to store digital assets.
Cryptoexchanges were supposed to collect this information in 2024, but the requirements were delayed. Brokers will be required to report gross proceeds for sales of digital assets on or after Jan.1, 2025. Adjusted basis reporting will be required for sales on or after Jan. 1, 2026.
The IRS will also create 1099-A forms that brokers can provide to taxpayers to determine what they owe.
The new guidelines would not affect companies that validate or "mine" cryptocurrency, a position that Treasury alleged last year and that has bipartisan support.
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The public will have until Oct. 30 to comment on the proposal.
Congress has proposed new guardrails for cryptocurrency as a whole. The House Financial Services Committee approved legislation on July 30 that would create a regulatory framework for the issuance and trading of digital assets at the Securities and Exchange Commission and Commodity Futures Trading Commission.