- The IRS in the United States will enforce new reporting requirements for cryptocurrency transactions exceeding $10,000.
- Part of the infrastructure bill signed into law by President Joe Biden, this directive expands reporting obligations for crypto brokers to enhance tax compliance.
In a notable regulatory shift, the Internal Revenue Service (IRS) of the United States is poised to implement new reporting obligations for cryptocurrency transactions exceeding $10,000, enacted under the bipartisan infrastructure bill of 2021. These provisions mandate crypto brokers, including exchanges and custodians, to report such transactions to the IRS, demanding detailed personal information within a 15-day period starting in 2024.
The primary aim of this move is to bridge the tax gap by enhancing transparency and tax compliance within the expanding crypto sector. However, industry participants express apprehension and uncertainty regarding compliance complexities. Jerry Brito, Coin Center’s executive director, highlights challenges in adhering to these requirements, especially regarding mining, validating, and decentralized exchanges.
The ambiguity arises particularly in reporting block rewards exceeding $10,000 by miners and validators, as well as identifying counterparties in decentralized crypto-for-crypto exchanges. These difficulties escalate with anonymous transactions where sender identification becomes nearly impossible.
Complexities and Challenges in Compliance
Coin Center proposed a de minimis exemption for certain crypto transactions and advocated against applying these rules to second parties in crypto transactions. Despite these recommendations, the expanded reporting requirements signify a significant regulatory shift in the digital asset landscape.
The IRS’s prior initiatives since 2019 for specific reporting on digital asset transactions laid the groundwork for these extended mandates. However, the implementation of these new rules in 2024 raises pivotal questions about compliance feasibility, privacy concerns, and the evolving dynamics between regulation and the vibrant world of cryptocurrencies.
