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The US Treasury has introduced a new proposal that mandates cryptocurrency exchanges and payment processors in the country to report transaction details of their users to the Internal Revenue Service (IRS).
The primary objective of these regulations is to mitigate the risks of tax evasion associated with digital assets. The Joint Committee on Taxation estimates that these measures could generate approximately $28 billion in tax revenue over the course of a decade.
The proposal stipulates that various crypto entities, including both centralized and decentralized exchanges, payment processors, and certain hosted wallets, must furnish a newly devised tax reporting form, referred to as Form 1099-DA. This form will aid taxpayers in determining their tax liabilities. The scope of the rules encompasses cryptocurrencies such as Bitcoin and Ether, as well as Non-Fungible Tokens (NFTs).
The information included in the Form 1099-DA will encompass details about customers’ capital gains and losses. This data will be shared with both customers and the IRS. This alignment with information reporting regulations for securities and other financial instruments is intended to bring the treatment of cryptocurrencies in line with established practices.
The proposed regulation is set to take effect in 2026, marking the first year in which brokers will be obligated to report any information pertaining to the sales and exchanges of digital assets.
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