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White House gives cryptocurrency traders just what they wanted... tax laws

The Biden administration is proposing new laws that would require cryptocurrency brokers to provide customers with tax forms on transactions over $600

The US government is considering new laws to tax cryptocurrency sales.

The Biden Administration on Friday put out a set of proposed rules on the sale of what the Treasury Department termed "digital assets" and how money gained from sales is reported and taxed.

"The proposed regulations would clarify and adjust the rules regarding the tax reporting of information by brokers, so that brokers for digital assets are subject to the same information reporting rules as brokers for securities and other financial instruments," the US Treasury Department said.

In short, the law would require cryptocurrency exchanges (and other digital asset brokers) to provide customers with tax forms that would summarize their transactions and, more importantly for the government, make it easier to figure out how much tax is owed on gains from sales.

In the proposed law, a "broker" will be defined as "digital asset trading platforms, digital asset payment processors, certain digital asset hosted wallet providers, and persons who regularly offer to redeem digital assets that were created or issued by that person" and the form will be required for sales over $600.

The hope is that by requiring brokers to provide a 1099-DA form for transactions, the burden of figuring out tax owed from sales will be shifted from the individual investors who would otherwise have to calculate the gains and taxes owed by themselves or with an accountant.

"These proposed rules require brokers to provide a new Form 1099-DA to help taxpayers determine if they owe taxes, and would help taxpayers avoid having to make complicated calculations or pay digital asset tax preparation services in order to file their tax returns," Treasury said.

"These regulations align tax reporting on digital assets with tax reporting on other assets, and, as a result, avoid preferential treatment between different types of assets."

Members of the public will have until October 30 to make their opinions on the proposed rules known. Following the public comment period, Treasury plans to hold public hearings on November 7 and 8.

As cryptocurrency traders tend to skew in favor of wanting less federal regulation on financial matters, it is likely that Treasury will not be getting much praise from the commentariat during the open period or in their hearings.

The proposed rules land at a turbulent time for the cryptocurrency market. Following news that SpaceX was divesting its cryptocurrency holdings, the likes of Bitcoin, Ethereum, and Dogecoin have all seen their values drop in a minor sell-off.