The Biden administration is implementing new regulations to ensure accurate tax reporting on digital asset transactions by crypto platforms.
On Friday, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) finalized rules that will require crypto brokers to report digital asset sales and exchanges to the IRS, starting in 2025.
These regulations apply to brokers who handle digital assets sold by their customers, including operators of custodial digital asset trading platforms, certain wallet providers, digital asset kiosks, and certain processors of digital asset payments (PDAPs).
By focusing on these entities, the IRS aims to cover the majority of taxpayers, as most digital asset transactions are conducted through these brokers.
IRS Commissioner Danny Werfel states, “These regulations play a crucial role in our broader effort to ensure tax compliance among high-income individuals. We must prevent digital assets from being used to conceal taxable income, and these final rules will enhance our ability to detect non-compliance in the high-risk digital asset space.”
Furthermore, real estate professionals will be required to report the fair market value of digital assets used in real estate transactions with closing dates on or after January 1st, 2026.
However, transactions involving stablecoins, non-fungible tokens (NFTs), and digital asset payments are exempt from reporting requirements if they fall below certain thresholds.
Decentralized or non-custodial brokers are not subject to these reporting requirements, but separate regulations will be established for these platforms.
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