How to pay taxes on cryptocurrencies: the IRS and the US Treasury have revealed the rules

The US Treasury Department and the Internal Revenue Service (IRS) have introduced new cryptocurrency tax rules that require brokers and exchanges to report sales. Officials expect the new rules to "close the tax gap and ensure everyone plays by the same set of rules." Under the proposed rules, crypto brokers would be treated the same as more traditional brokers, such as stock brokers.

Currently, taxpayers are required to pay income taxes and can deduct losses on digital assets when they are sold. However, the Treasury said it was difficult for taxpayers to calculate their profits. Therefore, cryptocurrency exchanges and brokers will have to file a new Form 10990-DA, which will help taxpayers understand whether they need to pay taxes.

“These rules bring tax reporting for digital assets into line with reporting for other assets. Therefore, there will be no more favorable tax advantages between different types of assets,” the US Treasury said in a statement.

Under the new rules, the category of “brokers” includes cryptocurrency platforms, payment systems and certain crypto wallets. The IRS and Treasury emphasized that decentralized exchanges are also subject to the rules - they must identify customers and provide tax reporting.

Crypto brokers will be required to provide reporting from 2025. The US Treasury expects the cryptocurrency industry to generate $28 billion in taxes over 10 years.

Blockchain Association CEO Kristin Smit believes that the new rules, if applied correctly, will help cryptocurrency traders. She emphasized that the cryptocurrency ecosystem is very different from the traditional one, so it is necessary to carefully change taxation specifically for digital assets.

But the DeFi Education Fund called the rules “strange, self-contradictory and erroneous.”

In early August, a group of US senators called on the IRS to change the taxation of cryptocurrencies to close loopholes for evading any government taxes.