Cryptocurrency investors and brokerages are in a holding pattern, awaiting news on an imminent U.S. tax regulation overhaul concerning cryptocurrency taxes. However, ambiguity surrounds this situation as claims suggest that the Treasury’s Internal Revenue Service (IRS) has finished the proposal. Regardless, industry insiders question the White House’s purport delay amidst the rising prominence of cryptocurrency discussions in Washington.
The planned regulation is designed to guide crypto firms on how to report their customers’ tax positions, mirroring traditional brokerage filings of 1099 forms that present gains and losses. Uncertainty within the industry burgeons around whether these businesses will be called upon to document data they cannot access or whether the regulation would cover crypto companies without customer relationships such as mining enterprises. Despite the lingering uncertainty, new regulations could clear some attitudes regarding crypto and taxation. Many industry leaders perceive this as a stride towards routine government oversight.
Cody Carbone, who spearheads the policy team at the Chamber of Digital Commerce, attributes the hold-up to possible “pushback from the White House.” The government might be wary to lend credibility to the crypto industry with new rules while preparing legislation for oversight of digital assets markets and stablecoins.
However, the sense of waiting isn’t without its frustrations with Lawrence Zlatkin, Head of the Tax Arm at Coinbase, stating “we shouldn’t be in a cloud of uncertainty” and emphasizes that clearer regulations could enable Coinbase to help investors comprehend their tax liabilities better.
The timeline for implementing these rules is under scrutiny. The typical procedure for instigating a new tax rule – including proposing, gathering public comments, and implementing – tends to take several months or far longer, implying this process could continue into 2023 and beyond.
The continuation of this policy stalemate invokes unease among U.S. Lawmakers. They warn of financial repercussions if the IRS fails to enact final rules promptly. Strong tax reporting rules, they posit, would fill government coffers with billions in previously uncollected tax dollars while identifying and pursuing tax evaders.
The lingering concerns in the crypto industry concern the potential misuse of defining “brokers,” but the treasury has reassured stakeholders that it does not intend to include businesses that generally do not have access to customer information, like crypto miners. And while a lack of public commitment exists for a 2024 implementation, rumors persist that the IRS has not acknowledged any delay. As a result, industry stakeholders are moving forward with the expectation that these broker reporting rules will be set as planned.
Source: Coindesk
