The Crypto Roundup: 01 July 2024 | CryptoCompare.com

The Crypto Roundup: 01 July 2024 | CryptoCompare.com

The Crypto Roundup: 01 July 2024 | CryptoCompare.com PlatoBlockchain Data Intelligence. Vertical Search. Ai.

The Internal Revenue Service (IRS) released a revised version of its proposed regulations on cryptocurrency broker reporting requirements, a move that has been met with cautious optimism by the crypto industry.

The initial draft, published in August 2023, sparked concern due to its broad definition of a “broker,” potentially encompassing non-custodial platforms like decentralized exchanges (DEXs), which could lead to burdensome reporting requirements and privacy-invasive practices.

Under the revised guidelines, centralized exchanges like Coinbase and Kraken will be subject to the new reporting rules, which partially go into effect in 2025, while the rules being implemented on decentralized, non-custodial protocols remain unclear.

The filing details that the “Treasury Department and the IRS would benefit from additional consideration of issues involving non-custodial industry participants.”

Coin Center and other industry groups had previously pushed back against the IRS’s initial broad definition of a broker that seemingly roped in non-custodial, self-executing crypto platforms. Last week, the Blockchain Association expressed concern about the potential for hefty compliance costs associated with the rule.

The initial draft not only expanded the definition of a broker but also significantly increased the number of entities required to file 1099 tax forms, including a new crypto-specific form, the 1099-DA, to the point the Blockchain Associated estimated the law could have resulted in 8 billion additional 1099-DA forms and compliance costs reaching $254 billion.

This was due to the broad scope of the reporting requirements, potentially encompassing nearly all blockchain-based asset trades, from non-fungible tokens (NFTs) to stablecoins.

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