The infrastructure legislation, championed by President Joe Biden, which received bipartisan support and was enacted in 2021, is now operational.
What Happened: This new law imposes reporting obligations on cryptocurrency brokers, necessitating that transactions exceeding $10,000 be disclosed to the Internal Revenue Service (IRS).
As part of a broader effort to bridge the tax gap in the U.S., the infrastructure bill compels crypto exchanges and custodians to submit client details, including names, addresses, and social security numbers, associated with transactions, within a 15-day window.
This requirement, originally marked for January 2023 commencement, results in businesses sending their first reports to the IRS in 2024.
The implementation of this law has prompted concerns from industry figures, including one from the cryptocurrency-focused non-profit Coin Center’s executive director Jerry Brito, who noted the potential difficulties users and filers may confront. “Many users will find it difficult to comply,” Brito said, emphasizing the risk individuals run of incurring felony charges in their endeavors to obey the law.
Brito scrutinized the practicality of the new requirements, questioning, “[I]f a miner or validator receives block rewards in excess of $10,000, whose name, address, and Social Security number do they report?"
He added, “If you engage in an on-chain decentralized exchange of crypto for crypto and you therefore receive $10,000 in cryptocurrency, who do you report? And by what standard should you measure whether an amount of a particular cryptocurrency is equivalent to more than $10,000?”
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Why It Matters: Brito elaborated on the law’s complexities by questioning a potential scenario, "The really tricky nature of this requirement will become clear when someone makes such a donation, but does so anonymously by simply sending us Bitcoin BTC/USD or Ethereum ETH/USD to our public addresses. Who could we possibly list as the sender in that case?”
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