The US Treasury Department has finalized a new rule aimed at ensuring proper taxation of cryptocurrency earnings, requiring platforms like exchanges and payment processors to report user transactions to the IRS.
This move is intended to curb tax evasion by providing the IRS with comprehensive data on taxpayers’ cryptocurrency activities, enabling more accurate tax assessments. By knowing the exact amounts owed, authorities hope to deter underreporting and enhance tax compliance among cryptocurrency holders.
Under the new rule, cryptocurrency brokers will be obligated to issue 1099 forms to users, simplifying the process of declaring earnings for taxpayers. This includes a specific form, 1099-DA, designed for tracking digital asset transactions.
Notably, transactions involving stablecoins and cryptocurrencies pegged to fiat currencies like the US dollar will be reported if they exceed a $10,000 threshold, further broadening the scope of transparency in crypto-related tax reporting.
Aviva Aron-Dine, the Treasury’s acting assistant secretary for tax policy, emphasized the rule’s benefits in facilitating easier tax filing for investors while strengthening efforts against tax evasion, particularly among wealthier investors.
The implementation of these reporting requirements aims to align taxpayers with current tax laws and reduce discrepancies in reporting digital asset earnings.
The rule applies specifically to centralized platforms that handle digital assets directly, such as Coinbase or Binance, which are omitting decentralized platforms for now. Decentralized exchanges will be subject to forthcoming regulations that are expected later this year.
Brokers are mandated to begin reporting digital asset sales proceeds in 2026 for transactions occurring in 2025, leaving cryptocurrency traders responsible for complying with existing tax regulations for the year 2024.
The new regulations represent a significant step towards comprehensive oversight of cryptocurrency transactions for tax purposes, aiming to improve transparency, compliance, and fairness in the taxation of digital assets within the United States.
