This Friday, the Biden administration announced it would postpone the requirements for cryptocurrency brokers to start tracking and reporting their customer’s gains that were set to take effect on January 1st. The delay is reportedly due to a lack of definitive provisions for the enforcement of the requirement.
IRS and Treasury Postpone the Enforcement of Infrastructure Bill Provisions for Cryptocurrency Brokers
The infrastructure bill, originally signed into law in late 2021, set the requirement for cryptocurrency brokers to start tracking their customers’ gains and reporting them to the Internal Revenue Service starting from January 1st, 2023. The $1 trillion worth bill represents a broad package covering things ranging from Amtrack and water supply to the taxation of digital assets.
In late December 2021, it was reported that the provision covering gains from cryptocurrency trading would be postponed indefinitely. Allegedly, the IRS and the US Treasury are yet to properly set and define the provisions for enforcing the elements of the bill pertaining to digital assets.
Earlier this month, Patrick McHenry, a Ranking Member of the House Financial Services Committee, wrote to the Treasury urging for more clarity in several parts of the bill concerning cryptocurrencies. The main issue McHenry pointed to was the section of the bill defining brokers:
As we have previously noted, Section 80603 is poorly drafted. As such it could be wrongly interpreted as expanding the definition of a “broker” beyond custodial digital asset intermediaries. It also directs Treasury to incorporate digital assets into the definition of “cash” for tax collection and reporting purposes. The 6050i reporting requirements jeopardize the privacy of Americans, without a comprehensive analysis of the impact of such change.
Today’s decision indicates that the IRS and the US Treasury agreed that the enforcement of the reporting requirement should be postponed until further clarity is provided. The bill was expected to generate $28 billion in taxes based on the digital asset provision alone.
A Long Way to Go For Cryptocurrency Regulation
While 2022 has been a big year for cryptocurrency regulations, both in terms of regulatory action and policy-making, recent events have proven beyond a shadow of a doubt that the authorities have a lot of work before catching up with the industry. The increased interest in digital assets is perhaps best illustrated by the fact the White House issued its very first framework for their regulation in September of this year.
On the regulatory side, the CFTC announced in its annual report that one-fifth of its actions were aimed at crypto assets. For its part, the SEC has been very active both when it comes to regulation and to the defining of the status of various cryptocurrencies. The agency also took the brunt of the pushback aimed at the watchdogs even getting called a “shakedown authority” at one point.
Politicians have also been active when it comes to cryptocurrencies. For example, Senators Lummis and Blackburn recently proposed an update of a 2015 cybersecurity bill to include digital assets. Firms within the industry haven’t been idle either. In September, the Blockchain Association announced the creation of a PAC focused on supporting crypto-friendly candidates, and, more recently, the exchange giant Binance announced it had joined the Chamber of Digital Commerce.
The post IRS and Treasury Delay Crypto Gains Reporting Requirements appeared first on Tokenist.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
