Treasury Department Issues Proposed Regulations For Brokers Of 'Digital Assets'

On August 25, 2023, the US Department of the Treasury issued proposed regulations that would impose new information reporting requirements for brokers that facilitate certain transactions involving "digital assets" – if finalized in their present form. The proposed regulations were issued to implement certain changes to Section 6045 of the Internal Revenue Code of 1986, as amended, made by the Infrastructure Investment and Jobs Act (IIJA) to improve tax administration and compliance with respect to trading and investing in digital assets.¹

What is a 'digital asset'?

For purposes of the proposed regulations, a "digital asset" is a digital representation of value that is recorded on a cryptographically secured distributed ledger (or any similar technology), without regard to whether each individual transaction involving that digital asset is actually recorded on that ledger. Cryptocurrencies, non-fungible tokens (NFTs) and stablecoins generally would be considered