US Treasury Announces a New Rule Governing Cryptocurrency Taxes
Cryptocurrency Reporting Rules

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Taxes on cryptocurrency transactions are nothing new. The rules governing crypto trades, however, differ from those of other financial assets. And according to the US government, this has opened the door to potential criminal activity, not to mention the considerable underpayment of taxes on crypto transactions.

Meanwhile, a new regulation issued by the US Treasury Department seeks to crystalize crypto reporting rules, hopefully limiting bad actors while significantly increasing tax revenues on this burgeoning financial asset.

In short, the new rule requires cryptocurrency platforms, including exchanges and payment processing services, to report all user transactions to the Internal Revenue Service. This latest mandate aims to provide the IRS with clear documentation of taxpayers’ crypto-driven gains and losses.

Key Underlying the Treasury’s New Crypto Reporting Rule

The new rule will take effect in 2026 and sets a $10,000 threshold for reporting stablecoin transactions. Stablecoins are cryptocurrencies that track “fiat money,” which refers to government-backed currencies like the US dollar.

The IRS stresses that this is NOT a NEW TAX. Cryptocurrency transactions have always been subject to taxes. The new rule merely imposes similar requirements already applicable to brokers processing other asset sales, such as 1099s issued on the sale of stocks and bonds.

According to the Treasury Department, the new rule primarily focuses on curbing criminal activity. The lack of transparency on crypto platforms, the Treasury says, could potentially facilitate money laundering and funding terrorist groups. But with the new reporting rule, all transactions must be linked to legitimate and legally traceable users.

Brokers must issue a 1099-D form (Digital Asset Proceeds From Broker Transaction) specifically created to track crypto transactions. This change will ultimately streamline the process for crypto traders, as trading platforms will be required to give users a simple form accounting for their total gains, similar to what investors in stocks and other traditional assets receive annually from brokerages and other financial institutions.

Certain exceptions exist, most notably the exclusion of trades made through decentralized exchanges that occur peer-to-peer rather than on a typical third-party platform. But the Treasury Department is apparently considering additional reporting requirements for decentralized crypto exchanges that could be announced later this year.

Projected Increases in Tax Revenue on Crypto Trading

Claims of crime prevention aside, the federal government will likely see a massive windfall due to the new crypto reporting requirement. Renowned business consulting firm Deloit estimates this new rule will net $28 billion in additional tax revenue.

Have Questions About Cryptocurrency Reporting Requirements?

As I mentioned above, there’s a fair amount of confusion surrounding taxes on cryptocurrency trading. And while this new rule should simplify your accounting on total crypto earnings, there is still uncertainty over how to qualify transactions in which crypto is traded for goods or services.

If you have questions about any aspect of cryptocurrency exchange taxes, get in touch for a FREE consultation!

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