The US Treasury and IRS recently announced new regulations regarding reporting requirements for digital asset brokers, including exchanges. These regulations, set to take effect in the coming years, will impact how brokers report crypto sales and tax basis information to the IRS.
Starting from 2026, crypto brokers will be required to report gross proceeds from crypto sales, including those from 2025. Additionally, starting in 2027, brokers will need to report information about the tax basis of certain cryptos for sales that occurred in 2026. These regulations align crypto broker rules with those for traditional financial brokers but do not change what taxpayers owe.
The Treasury emphasized that owners of digital assets have always been responsible for paying taxes on the sale or exchange of these assets. The new regulations are a result of the bipartisan Infrastructure Investment and Jobs Act (IIJA), which created reporting requirements but did not impose new taxes on crypto.
These new requirements are expected to benefit both investors and the IRS. Acting Assistant Secretary for Tax Policy Aviva Aron-Dine stated that investors will have easier access to the documentation needed to file and review tax returns. Previously, investors had to rely on costly third-party services to calculate gains and losses from crypto sales. The new regulations will provide investors with all necessary information, in line with the directive from Congress.
In addition, the IRS will gain access to crucial information to address tax evasion risks related to crypto, particularly concerning wealthy investors. By implementing these regulations, the IRS aims to improve compliance and reduce tax evasion within the crypto market.
Despite industry resistance earlier on, the Treasury and IRS finalized the regulations after considering thousands of comments and holding public hearings. The final requirements have been modified to reduce burdens on brokers, phase in requirements gradually, and set a $10,000 threshold for stablecoin transaction reporting. Companies like Coinbase, which previously opposed the regulations citing privacy concerns and burdensome reporting requirements, will need to comply with the new rules.
Overall, these new regulations will bring about significant changes in how crypto sales are reported and taxed, providing clarity for investors and enabling the IRS to better enforce tax laws within the crypto space.