Treasury And IRS Propose New Rules On Digital Assets Reporting

On August 25, 2023, the Department of Treasury and the IRS released the long-awaited proposed regulations addressing information reporting for digital assets, including cryptocurrencies.

The proposed regulations broadly define the definition of a "broker" to include, among others, decentralized exchanges, unintended third parties, and real estate brokers concluding real estate transactions involving "digital assets" (also broadly defined to include NFTs and stablecoins). The proposed regulations aim to impose these newly defined information reporting rules upon any entity that is "regularly providing any service effectuating transfers of digital assets on behalf of another" in exchange for consideration. The proposed regulations cover broker information reporting, calculations of the amount realized and basis, as well as backup withholding for certain digital assets and exchanges. Certain exemptions apply. The government also provides new game-changing reporting