Did The US Just Reshape Crypto Landscape? Treasury, IRS Reveal New Rules

Two major U.S. federal agencies — the Department of the Treasury and the Internal Revenue Service (IRS) — have jointly introduced a comprehensive set of cryptocurrency regulations.

The initiative underscores the growing importance of digital assets in the financial landscape and the government's commitment to ensuring their transparent and lawful use.

The announcement comes at a pivotal time for the digital asset industry and is expected to be a topic of discussion at the upcoming Benzinga's Future of Digital Assets conference. The event will gather industry experts and stakeholders to delve into the implications of such regulatory measures and their impact on the broader cryptocurrency market.

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The proposed regulations primarily address information reporting, the determination of the amount realized, basis, and backup withholding for certain digital asset sales and exchanges. These guidelines are rooted in both existing authority and the provisions of the Infrastructure Investment and Jobs Act.

Key Highlights

• Expanded Definition Of Brokers: Digital asset trading platforms, payment processors, and certain hosted wallets are now encompassed within the definition of brokers. These entities are mandated to file information returns and provide payee statements for digital asset transactions executed on behalf of their clients.
• Real Estate Transactions: Real estate reporting entities, now deemed as brokers for specific real estate transactions, are required to report the fair market value of digital asset considerations received by sellers. Additionally, they must file returns for real estate buyers who transact using digital assets.
• Clarification On Digital Asset Terminology: The regulations provide clear definitions related to digital assets, describing them as digital representations of value, secured using cryptography and recorded on distributed ledgers, such as blockchains.
• Public Participation: The IRS has scheduled a public hearing on these proposed regulations for Nov. 7, 2023, with a potential second hearing on Nov. 8, 2023, depending on public response. Stakeholders are encouraged to submit their comments and requests for participation by Oct. 30, 2023.

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