US regulators including the Treasury Department and Internal Revenue Service (IRS) proposed new rules that would force cryptocurrency exchanges to report more detailed information on user transactions. The new tax reporting regulations would apply to centralized and decentralized exchanges and aim to address the current digital asset tax gap.
New Reporting Rules Require Information for Crypto Capital Gains and Losses
The US Treasury Department and IRS put forward a proposal for new regulations under which US-based crypto exchanges would be required to report detailed information on customer transactions, starting in 2026. The proposal represents a part of the Biden administration’s wider push aimed at cracking down on crypto users who may be evading tax payments.
The suggested regulatory framework is intended to provide clarity on reporting rules implemented in 2021 to fight tax evasion practices used by crypto users. At the time the law was enacted, it was estimated that the regulations would boost tax revenues by an additional $28 billion over a 10-year period, the Joint Committee on Taxation projected.
According to the IRS, one of the key contributors to the current tax gap is unpaid digital asset taxes. The regulators hope to reduce this gap, which amounts to over $500 billion annually, by making it easier for US residents to know how much they owe, the Treasury said in a background call on Thursday.
Under the new regulations, platforms that offer crypto trading services such as Coinbase and Kraken, would be forced to track and disclose key information, including users’ capital gains and losses. Similar rules already apply to stock and bond broker-dealers.
Crypto Exchanges to Start Filing Reports in 2026
Initially, crypto exchanges were expected to start keeping tabs on such information at the start of 2023, and file reports to the IRS and investors in 2024. However, these regulations were postponed by the US government until the final draft of the framework is unveiled.
Instead, trading platforms will be asked to report gross proceeds for sales of cryptocurrencies on or after January 2025, and on or after January 1, 2026, for adjusted basis reporting. The new rules will apply to both centralized and decentralized exchanges, Treasury noted.
The proposal represents the latest in a number of efforts by US authorities to regulate the nascent digital assets industry. These endeavors have been additionally ramped up since a series of high-profile collapses in 2022 that caused tens of billions of dollars in investor losses.
This article originally appeared on The Tokenist
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