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Key Points: The US Treasury and IRS issued final regulations for digital asset transaction reporting, effective in 2025. The Treasury digital asset regulations align crypto tax requirements with other financial instruments and exclude non-custodial brokers for now. Concerns exist that the rules could stifle innovation and push development offshore. The US Treasury Department and IRS have issued final regulations for reporting digital asset transactions, set to take effect in 2025. New Treasury Digital Asset Regulations Set for 2025 According to Forbes, these Treasury digital asset regulations aim to increase transparency and tax compliance in the cryptocurrency industry. However, critics argue that the broad definition of “broker” and compliance burdens may affect smaller entities with limited transaction visibility. IRS Commissioner Danny Werfel said the importance of these regulations in ensuring digital assets are not used to hide taxable income. The rule, which will be phased in starting next year for the 2026 tax filing season, aligns cryptocurrency tax requirements with those for other financial instruments like stocks and bonds. While the final rules no longer require transaction IDs on 1099 forms, brokers must still collect and store this information for seven years. The Treasury digital asset regulations are expected to be controversial, with crypto companies and users advised to seek guidance from tax professionals to ensure compliance. Concerns Over Innovation Stifling and Offshore Development in Crypto Industry Some industry experts and lawmakers have praised the Treasury for a more balanced approach compared to earlier proposals. The final rules delay implementation until 2025, offer optional aggregate reporting for certain stablecoins and NFTs, and exclude non-custodial brokers from reporting requirements for now. The potential impact of these rules on innovation in the crypto space remains a concern. Supporters believe clear reporting guidelines will legitimize the industry and attract institutional investors, while others worry…

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Filed under: News - @ July 3, 2024 7:22 pm