US Treasury Publishes Proposed Crypto Tax Rules

The US federal government has announced proposed tax rules for cryptocurrency holders and exchanges designed to weed out crypto tax evaders while making it easier for legitimate taxpayers to comply with the law.

The proposed rules, presented by the Treasury Department on Friday, would oblige crypto exchanges such as Nasdaq-listed Coinbase to report transactions to the Internal Revenue Service in the same way as brokers who handle instruments such as stocks and bonds.

The exchanges would send annual reports to the IRS and taxpayers showing the gross proceeds from transactions, beginning in 2026 for the 2025 tax year.

Later exchanges are also to begin reporting how much customers paid for their assets, known as the cost basis, used in calculating capital gains, which face federal taxes of up to 23.8 percent.

Tax rules

The information in the proposed 1099-DA form would also be sent by brokers to investors to help them with potentially complex tax calculations.

The rules would apply to both centralised exchanges and to decentralised finance (DeFi) organisations that use software to directly connect buyers and sellers, covering cryptocurrencies as well as other digital assets such as nonfungible tokens (NFTs).

The 2021 Infrastructure Investment and Jobs Act required the IRS to define which firms qualify as crypto brokers and to provide forms and instructions for reporting.

“This is part of a broader effort at Treasury to close the tax gap, address the tax evasion risks posed by digital assets, and help ensure that everyone plays by the same set of rules,” said the Treasury Department in a statement.

‘Misguided’

The Blockchain Association said the proposed rules could help crypto traders comply with tax laws “if done correctly”.

But Miller Whitehouse-Levine, head of decentralised finance lobbying organisation the DeFi Education Fund, called the proposal “confusing, self-refuting and misguided”.

“It attempts to apply regulatory frameworks predicated on the existence of intermediaries where they don’t exist,” Whitehouse-Levine said.