IRS and Treasury: No Reporting of Cryptocurrency Receipts Until New Regulations
The Internal Revenue Service (IRS) and the U.S. Treasury Department have announced that American businesses are not required to report cryptocurrency receipts in the same way as cash, until new regulations are issued. The exception will remain in place until the Treasury and IRS issue the proposed regulations. However, existing rules for reporting cash received in the course of a trade or business remain unchanged.
New Regulations for Crypto Transactions
In late September 2023, the IRS introduced proposed regulations to expand reporting requirements for crypto transactions. These regulations aim to cover specific crypto sales and exchanges. Under the proposed regulations, brokers would have new responsibilities, including submitting information returns and providing payee statements for designated crypto dispositions on behalf of their customers. This would require the introduction of a new IRS form.
The regulations are expected to be effective in 2026, with applicability to transactions in 2025. Certain provisions will become effective in 2027 for transactions occurring in 2026.
Concerns Raised by Consensys
Consensys, a blockchain firm, has expressed concerns about the proposed regulations. They believe that if finalized as is, these regulations would impose a complex regulatory scheme on software developers and others in a fast-growing industry with unique technical and operational features.
Hot Take: Proposed Regulations Raise Concerns for Crypto Industry
The announcement from the IRS and Treasury regarding the reporting of cryptocurrency receipts brings temporary relief for American businesses. However, with proposed regulations on the horizon, there are concerns about the impact on brokers and software developers within the crypto industry. The introduction of new responsibilities and reporting requirements may create challenges and hinder innovation in this rapidly evolving sector. As stakeholders await further guidance from the IRS and Treasury, it remains crucial to strike a balance between regulatory oversight and fostering growth in the crypto market.
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