U.S.-based cryptocurrency exchanges such as Coinbase Global Inc. and Kraken would have to report detailed information on their clients' transactions to the IRS starting in 2026 under a new Treasury proposal.
The proposed regulations from the Treasury Department and Internal Revenue Service offer clarity on reporting rules enacted in 2021 to curb crypto-related tax evasion by offering more transparency into customer trades.
At the time, it was estimated the measure would raise up to $28 billion in additional revenue over 10 years, according to the Joint Committee on Taxation.
The IRS has pointed to unpaid digital-asset taxes as a contributor to the tax gap — the difference between taxes owed and collected, which totals more than $500 billion per year.
The proposed regulations would help "crack down on tax cheats while helping law-abiding taxpayers know how much they owe on the sale or exchange of digital assets," Treasury said in a news release.
Under the rules, platforms that facilitate the buying and selling of digital assets, also known as crypto brokers, would have to track and report key information, such as customers' capital gains and losses — similar to existing requirements for stock and bond brokers.
The term "brokers" would include digital-asset trading platforms, payment processors and certain hosted wallets, according to the regulations unveiled Friday. The proposal would also extend reporting requirements to real estate brokers in cases where digital assets are used to purchase property.
Crypto firms were supposed to begin recording that data at the start of this year, and file reports to the IRS and investors next year. But the government in December delayed those requirements until it releases final rules.
Under the proposal, brokers would be required starting in 2026 to report gross proceeds for sales of digital assets on or after Jan. 1, 2025. Adjusted basis reporting — which would incorporate how much a customer paid for the assets — would kick in the following year for sales on or after Jan. 1, 2026.
The separate dates give brokers more time to adjust to the new rules, a Treasury official said Thursday on a call with reporters.
"There's obviously an immediate investment cost to brokers that will have to implement this and digest and figure out how to do it," said Miles Fuller, head of government solutions at crypto tax software company TaxBit. "But the longer term outlook in my view, is good for the industry because it'll help bring more mainstream adoption."
DeFi, NFTs Included
The reporting requirements would apply to both centralized and decentralized exchanges. "This decision was made because the reasons for requiring information reporting on dispositions of digital assets do not depend on the manner by which a business operating a platform effects customers' transactions," Treasury said in the proposed regulations.
The department said it was concerned that if it treated the two types of trading platforms differently, crypto firms might change their operations to avoid reporting or customers would seek out certain platforms to make it easier for them to evade taxes.
