U.S. Treasury and IRS Propose New Rules for Bitcoin and Crypto Trades via Brokers

Today, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) unveiled a series of suggested rules emphasizing the sale and exchange of digital assets by brokers. 

This aligns with the broader framework presented by the Biden-Harris Administration's bipartisan Infrastructure Investment and Jobs Act (IIJA), aiming "to close the tax gap, address the tax evasion risks posed by digital assets, and help ensure that everyone plays by the same set of rules."

The IRS commented, "these proposed regulations would require brokers, including digital asset trading platforms, digital asset payment processors, and certain digital asset hosted wallets, to file information returns, and furnish payee statements, on dispositions of digital assets effected for customers in certain sale or exchange transactions."

Such rules compel digital asset brokers to document the exact sales and exchanges made on behalf of their clients. 

Additionally, the rules incorporate a provision for brokers to produce a new Form 1099-DA, assisting users in determining their tax obligations.

As outlined in the rules, brokers are expected to begin sharing details on sales and exchanges of digital assets from 2026, covering operations conducted in 2025. 

The Joint Committee on Taxation projects that these IIJA measures might yield close to $28 billion in revenue over a decade.

Both the Treasury Department and the IRS are proactively seeking input from impacted taxpayers, sectors, and other interested parties concerning the suggested rules. 

They will be accepting written feedback until October 30th, 2023. Moreover, a public discourse is set for November 7th, 2023, with a tentative subsequent session on November 8th, 2023, contingent upon demand.