New Law on Cryptocurrency Transactions – Key Update
A Notable Voice in Cryptocurrency Policy
The Mission of Coin Center
What the Law Requires
Operational Status of the Law
Coin Center’s View of the Law
Challenges in Compliance
Uncertainty in the Reporting Process
IRS Action and Compliance Challenges
On January 2, 2024, the cryptocurrency community received an update from Jerry Brito, the Executive Director of Coin Center, regarding a new legislation that is set to have a major impact on cryptocurrency transactions.
Coin Center, a non-profit research and advocacy organization, based in Washington, D.C., offers key insights into the Infrastructure Investment and Jobs Act passed in November 2021. This new law introduces a provision in the Tax Code, effective from January 1, 2024, requiring individuals receiving $10,000 or more in cryptocurrency as part of their business to report the transaction to the IRS.
The passing of the legislation in question relates to the reporting of cryptocurrency transactions to the IRS, leaving many to navigate potential provisions. The law is self-executing; Coin Center filed legal action against the Treasury Department, challenging the law in June 2022, contesting its constitutionality.
Compliance with the law will present several challenges to those involved in cryptocurrency transactions and could lead to several unintended consequences. Furthermore, the law lacks clarity and specific guidance for cryptocurrency transactions, rendering reporting obligations open to interpretation.
Hot Take
In view of the identified challenges, widespread uncertainties plague the practical application of the Infrastructure Investment and Jobs Act’s reporting obligations for cryptocurrencies, promising significant disruptions to the crypto community at large.
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