Crypto investors and their brokerages are waiting for a U.S. tax rule that will completely overhaul how they report their cryptocurrency taxes, but the government isn’t offering any straight answers about its holdup even as prominent lawmakers clamor for the Treasury Department to finish the job.
In reality, the Treasury’s Internal Revenue Service (IRS) actually completed the proposal months ago – enough to get it through a formal internal review at the White House – but hasn’t taken the last step of issuing it publicly, and industry insiders are now wondering whether the White House has delayed the process while other crypto policy questions seized the spotlight in Washington.
When it comes out, the proposed rule will govern how crypto firms report information about customers’ tax positions – akin to traditional brokerages’ filings of 1099 forms that outline gains and losses. The industry’s potential worries include whether businesses will be asked to provide information they don’t have access to, or whether it will sweep in crypto companies that don’t have that kind of relationship with customers – such as mining operations.
But the bright side for the digital assets sector is that it potentially eliminates one of the central objections to crypto – that it’s hard for investors to work out the taxes. When crypto taxes are eventually handled in much the same way as other financial investments, many in the industry see that as another step toward proper government oversight in the U.S.
While the proposal may be ready to go, Cody Carbone, who leads the policy team at the Chamber of Digital Commerce, said that “pushback from the White House” may have held it back. He said there may have been fears of legitimizing the crypto industry with this rule while also debating oversight legislation for the digital assets markets and stablecoins – a congressional negotiation last month that the White House’s National Economic Council was said to have been a vigorous participant in. Still, Carbone said he’s heard the IRS may issue the proposed tax-reporting rules any day…
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