Stay Tuned: IRS Issues Warning On Reporting Of Cryptocurrency Income, But Guidance Still Lacking

On July 2, the Internal Revenue Service (IRS) announced its intention to address noncompliance related to the use and trading of virtual currencies, also known as "cryptocurrencies." The announcement was short on specifics, other than to say that future guidance may be forthcoming. Taxpayers are, therefore, left in a familiar position: attempting to comply but with little information about what their actual tax and reporting obligations are.

Notably, the IRS has been slow to react to the rapid growth of the cryptocurrency market, which includes household names like bitcoin and Ethereum traded on widely used platforms such as Coinbase, but also a significant number of lesser‑known currencies traded by U.S. taxpayers on exchanges all over the world. By some estimates, the global cryptocurrency market is close to—or has already exceeded—$1 trillion. In 2014, the IRS released Notice 2014‑21, stating that the IRS would treat virtual currencies as "property" for federal