The U.S. Department of the Treasury and Internal Revenue Service (IRS) finalized regulations on June 28th, 2024, requiring cryptocurrency brokers to report customer transactions to the IRS. This aims to improve tax collection and crack down on crypto-related tax evasion.
Key points:
- Affects centralized exchanges and similar custodians: Starting in 2025, these brokers will report gross proceeds from crypto sales. By 2026, they’ll also need to report cost-basis information for certain digital assets.
- Focuses on taxable events: The new rules target transactions already subject to taxes under existing laws.
- Relief for some transactions: Routine stablecoin sales and NFT transactions below $600 annually are exempt from reporting for now.
- Decentralized finance (DeFi) not yet addressed: Regulations for DeFi platforms and non-custodial wallets are expected later this year.
Overall, this is a significant step towards increased IRS oversight of cryptocurrency transactions. While it simplifies tax reporting for some crypto investors by relying on broker reports (1099 forms), it also strengthens the IRS’s ability to track crypto gains and losses.
