The Crypto Roundup: 28 August 2023 | CryptoCompare.com

The Crypto Roundup: 28 August 2023 | CryptoCompare.com

Time Stamp: August 28, 2023 4:23 AM
Source Node: 2849534

The U.S. Department of the Treasury, in collaboration with the Internal Revenue Service (IRS), has unveiled a draft proposal targeting the reporting of digital asset transactions. While the proposal is still in its preliminary stage, it has already sparked debate within the crypto industry, particularly concerning the treatment of decentralized exchanges.

The draft stipulates that brokers facilitating the sale and exchange of digital assets must report specific transactions, aligning them with existing financial reporting requirements. However, decentralized exchanges could find themselves ensnared in these reporting obligations, despite their claims of lacking the staff or management to handle such responsibilities.

The proposal is open for public comment until October 30, and public hearings are scheduled for November 7 and 8. This period allows the industry to voice its concerns and lobby federal officials before the rules are finalized.

Once the Treasury and IRS have considered all feedback, the regulations could be approved in their final form. However, the crypto industry has been granted some leeway, as the rules, if approved, would only come into effect for the 2025 tax year. This deferral provides the industry with additional time to prepare for the changes, which were initially expected to be implemented as early as next year.

The draft proposal is part of a broader effort by the Biden-Harris Administration to close tax compliance gaps and address potential risks of tax evasion in the rapidly growing digital asset sector. The proposal also outlines a timeline for implementation, stating that brokers would be required to start reporting digital asset sales and exchanges beginning in 2026, covering transactions made in 2025.

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