After years of negotiations and debates, the finalized crypto tax measures have been welcomed by industry advocates. However, discussions about non-custodial providers still loom on the horizon.
The Internal Revenue Service and the Treasury Department have reached a consensus on new reporting rules for crypto taxes. Initially, it may seem daunting for exchanges and customers alike. Yet, given the historical lack of clarity in the industry, the policy has been well-received, with a staggering 44,000 comments during consultations.
The newly established guidelines offer a clearer path to follow for all parties involved. Trading platforms will now be responsible for reporting customer gains and losses, with the rules gradually being implemented over the next three years. This is expected to simplify tax filings for taxpayers who have been struggling to accurately report profits from crypto investments.
Furthermore, the IRS stands to benefit significantly from these measures, with estimates suggesting a potential $28 billion boost in tax revenue over the next decade. However, those who have failed to declare gains in the past may now face consequences as the IRS aims to close the tax gap related to digital assets.
While the new rules address many issues, there is still work to be done, particularly in the case of decentralized brokers who have been omitted from the guidelines. The IRS and Treasury recognize the need to further consider these transactions. Regardless, most taxpayers currently use centralized brokers.
In a statement to crypto.news, TaxBit’s VP of tax, Erin Fennimore, hailed the new rules as a significant step forward for digital assets in the U.S. She believes the regulations bring much-needed clarity and legitimacy to the growing financial market, potentially making digital assets a more accessible investment option.
Coin Center also welcomed the finalized rules but criticized the time wasted in reaching this point. A major point of contention was the definition of a “broker” in the crypto space, which has now been clarified to apply to centralized exchanges like Coinbase and Kraken.
The group warned of potential constitutional violations if the definition had remained vague, as it could have required various entities in the industry to monitor users and report transactions. The unresolved issue of non-custodial entities poses a challenge for the future, hinting at further complications ahead.