US Treasury Finalizes Crypto Tax Rules

On Friday, the US Treasury Department finalized a rule mandating cryptocurrency brokers, including exchanges and payment processors, to submit new data on users’ digital asset transactions and exchanges to the IRS

The new requirements are intended to address the issue of crypto users who may need to pay their taxes more. They result from the $1 trillion bipartisan 2021 Infrastructure Investment and Jobs Act.

The new regulations were estimated to generate nearly $28 billion over a decade when the bill was enacted.

Treasury stated that the rule, which will be implemented gradually beginning next year for the 2026 tax filing season, will ensure that the tax requirements for cryptocurrencies are consistent with the existing tax reporting requirements for brokers for other financial instruments, such as equities and bonds.

Treasury officials stated that the final rule was altered from the original proposal to gradually reduce the burden on intermediaries and introduce the new requirements.

It also includes a $10,000 threshold for reporting on stablecoins transactions, a crypto token typically pegged to an asset such as the U.S. dollar.

After the Treasury proposed the rule last year, the cryptocurrency industry conducted a comment letter campaign, contending that the definition of a broker in the proposal was comprehensive and that the requirements infringed upon the privacy of crypto owners.

Treasury stated that it evaluated over 44,000 comments regarding the proposal. It also indicated that it plans to issue supplementary regulations later this year to establish tax reporting requirements for non-custodial brokers, which include decentralized crypto exchanges.

Treasury emphasized in a release that crypto owners “have always owed tax on the sale or exchange of digital assets” and that the new rule “simply created reporting requirements… to help taxpayers file accurate returns and pay taxes owed under current law.”

The rule introduces form 1099-DA, a new tax reporting form. According to the Treasury Department, it is intended to assist taxpayers in determining whether they owe taxes and prevent crypto users from having to perform complex calculations to determine their gains.

Brokers would be required to transmit the documents to the IRS and digital asset holders to facilitate their tax preparation.
Currently, the IRS mandates that crypto users disclose significant digital asset activities on their tax returns, irrespective of whether the transactions generated a profit.

The IRS is not provided with this information by the platforms on which digital assets are traded, and users are obligated to perform the calculation independently.