- The regulations will start being implemented on or after January 1, 2026.
- The regulations require US-based brokers to file information returns with the IRS using the new Form 1099-DA.
- The brokers will also be required to provide payee statements to customers.
The US Department of the Treasury and the Internal Revenue Service (IRS) have published a proposal for cryptocurrency laws outlining brokers’ reporting obligations.
The proposal about cryptocurrency laws for brokers was released on August 29, according to the Office of Advocacy of the US Small Business Administration, which said that “the proposed rules would require digital asset brokers, including trading platforms, payment processors, and certain hosted wallet providers, to report gross proceeds for all sales or exchanges of digital assets starting on January 1, 2025.”
The published proposal comes after the United States Government Accountability Office (GAO), a Congressional watchdog agency, released a 77-page report emphasizing the need for stricter crypto regulations.
Blockchain technology—like #cryptocurrency—could offer faster, cheaper financial transactions. But recent price crashes & bankruptcies have raised concerns about gaps in federal regulations that could put consumers at risk. Our new report & video explore: https://t.co/1vyIgZVaYi pic.twitter.com/nxHrk1g5dQ
— U.S. GAO (@USGAO) July 24, 2023
Digital asset middlemen
Cryptocurrency brokers are referred to as “digital asset middlemen” in the regulatory proposal.
According to the proposal, the brokers will be subject to providing information on gains and losses incurred during the sale of crypto assets. However, this requirement will start being implemented on or after January 1, 2026.
The proposed regulations are anticipated to result in “higher levels of taxpayer compliance” since the IRS would have more information about the money made by taxpayers, according to a linked document shared on the Federal Register.
Small businesses in the United States have been invited by the Treasury Department and the IRS to discuss how the restrictions might affect them. A public hearing is scheduled for November 7, 2023, to support this invitation.
Once the laws are enacted into law, all brokers operating in the United States will need to submit information returns to the IRS using the new Form 1099-DA and give payee statements to clients.