Source: Phyrex
The crypto tax broker rules were finalized and passed. The rules are not friendly, with a total of 177 pages. They will be implemented 60 days after the announcement, but there will be some concessions from 2025 to 2026, but the scale is unknown. Trump has the ability to abolish it, but of course he still needs the support of Congress. In addition, if there is KYC, it will be very troublesome. The absence of KYC tax is one aspect. On the other hand, the confidentiality of assets, with KYC, still needs to be handed in.
The current drop in Bitcoin prices may be related to this incident. It is expected that the most affected will be small and medium-sized altcoins, but mainstream coins will also be affected to some extent, especially those focused on the chain.
The document contains final regulations issued by the U.S. Treasury Department and the Internal Revenue Service (IRS), mainly related to the requirements for brokers to report crypto asset transactions. These regulations outline the information reporting obligations, clarify the definition of the scope of cryptocurrency brokers, and how to handle information on digital asset sales and transactions.
The goal is to improve tax compliance and reduce the tax gap of unreported income through third-party reporting. Tax information reporting for digital asset transactions has been added. It involves individuals or organizations that regularly provide services to enable the transfer of digital assets, including decentralized finance (DeFi) participants, who are considered cryptocurrency brokers. The definition of brokers is expanded to service providers that provide transaction matching, market creation, order matching, custody or managed services.
The main contents of the new regulations are:
1. Brokers are required to submit information reports including total transaction revenue and other details.
Brokers are required to file information reports with the IRS (such as Form 1099-B), including:
A. Total revenue from digital asset transactions.
B. Information of both parties to the transaction (such as identity and address).
C. For each transaction, the transfer price and basis of the asset must be recorded.
2. For DeFi protocols, the definition of "digital asset intermediary" is clarified and the specific service types that need to be reported are listed.
If a non-custodial wallet provider is involved in the transaction process and has information about the transaction, it may be considered a broker.
3. Exceptions for those who do not meet the “broker” requirements
A. Validators who only verify transactions.
B. Vendors that only provide hardware or software for digital asset private key management.
C. Other participants who are not directly involved in facilitating the transaction or do not know the details of the transaction.
The regulations will take effect 60 days after the Federal Register is published. This regulation clarifies the three-layer model of the DeFi technology stack: interface layer, application layer, and settlement layer. Information reporting requirements are proposed for "front-end services" that provide user interfaces or transaction entrances.
Original document address: public-inspection.federalregister.gov/2024-30496.pdf
