Key points:

  • From 2026, cryptocurrency brokers will be required to provide the IRS with information about their clients’ transactions in digital assets.
  • These measures are expected to bring about $28 billion to the US budget over 10 years.
  • Brokers will be required to provide Form 1099-DA to both the IRS and cryptocurrency asset holders.

The US Treasury Department is introducing a new rule aimed at increasing the transparency of cryptocurrency transactions. From now on, cryptocurrency brokers, including exchanges and payment systems, will be required to provide the Internal Revenue Service (IRS) with more detailed information about their clients’ transactions related to the sale and exchange of digital assets.

What needs to be updated?

New rules aimed at combating tax evasion on cryptocurrency income are being introduced under the bipartisan Infrastructure Investment and Jobs Act of 2021. It is expected that over 10 years these measures will bring about $28 billion to the US budget.

Beginning in 2026, during tax filing season, cryptocurrency brokers will be required to provide the Internal Revenue Service (IRS) with information about their clients’ transactions, similar to what is already required for other financial instruments such as stocks and bonds.

Changes to original proposal:

  • The burden on brokers has been reduced due to the gradual implementation of new requirements.
  • A $10,000 threshold has been set for reporting transactions in stablecoins—cryptocurrencies pegged to the exchange rate of stable assets such as the US dollar.
  • The new rules do not apply to decentralized exchanges and non-custodial wallets.
  • The US Treasury Department plans to further develop regulatory measures for these market segments.

Crypto industry reaction

In response to the US Treasury’s proposal for new cryptocurrency tax rules, the cryptocurrency industry has launched an active commentary campaign. Critics of the proposal argue that the definition of a broker is too broad and the reporting requirements violate user privacy.

The US Treasury Department analyzed more than 44,000 comments received on this proposal. The department also said that it plans to issue additional rules regarding tax reporting requirements for non-custodial brokers, including decentralized cryptocurrency exchanges, at the end of 2024.

A new tax reporting form, Form 1099-DA, is designed to simplify the process of determining tax liability for cryptocurrency owners. According to representatives of the Ministry of Finance, it will relieve users of the need to independently calculate their profits.

Under the new rules, brokers will be required to provide Form 1099-DA to both the IRS and cryptocurrency asset owners, thereby making it easier for them to prepare their tax returns.

It’s worth noting that the IRS has long required cryptocurrency users to report many digital asset transactions on their tax returns, even if those transactions did not result in a profit. Previously, users had to calculate their profits on their own because cryptocurrency trading platforms did not provide the IRS with the relevant information.