On August 25, the US Treasury Department and the Internal Revenue Service (IRS) proposed new tax regulations for the crypto industry. It targets crypto exchanges, wallet providers, and payment processors.
If the new rules are adopted, they will come into effect in 2026. So far, the first reaction to these regulations has been negative. However, the IRS is waiting for feedback till October 30 this year.
Key points from the new IRS tax rules
The submitted 282-page document lists new tax guidelines for exchanges, payment systems, and other crypto projects. Some interesting aspects include:
🧐 According to the agencies, the term "broker" in the crypto industry refers to crypto exchanges, wallet providers, and payment processors: "digital asset trading platforms, digital asset payment processors, certain digital asset hosted wallet providers, and persons who regularly offer to redeem digital assets that were created or issued by that person."
💬 The new rules require these "brokers" to report information about client transactions to the IRS, just as stock market brokers do.
😬 The reporting requirements will also apply to some DEXs: "The proposed definition will ultimately require operators of some platforms generally referred to as decentralised exchanges to collect customer information and report sales information about their customers."
Notably, the document separately states that the term "broker" does not apply to miners and validators. However, the IRS has also recently announced taxes on staking.
Furthermore, the Treasury Department and the IRS expect the new regulations to bring in $28 billion over 10 years.
Community reaction
Until October 30, the agencies will be awaiting feedback from participants in the crypto industry. As for now, it looks like there will be plenty of responses. Let’s take a look at some notable reactions.
Congressman Patrick McHenry has called for clearer and narrower requirements from the agencies. He stated that the current version of these rules is the Biden Administration's "ongoing attack on the digital asset ecosystem".
Ryan Selkis, Founder and CEO of analytics platform Messari, tweeted that if Biden is re-elected, "there is no future for crypto in the US". He advocated for supporting Republicans in the election. By the way, check our article about candidates supporting cryptocurrencies in the USA.
A founder of dYdX, a popular decentralised exchange for leverage trading, said that developers should forget about the US market for five to ten years.
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