The U.S. Treasury has recently released draft regulations aimed at clarifying which individuals or entities bear the responsibility for reporting gains and losses of cryptocurrency owners.
The regulations delineate the criteria for identifying individuals falling under the "broker" category. These individuals will have the responsibility to furnish details regarding cryptocurrency transactions, enabling the US Internal Revenue Service (IRS) to identify potential instances of non-compliance.
The primary aim of these regulations is to ensure that reporting obligations are limited to those directly involved in cryptocurrency trade facilitation—those who actively engage in customer interactions. Entities that do not have customer-facing roles, such as Bitcoin mining companies, will not be subject to these regulatory requirements.
Under the proposed regulations, entities classified as brokers—comprising digital asset trading platforms, digital asset payment processors, and specific digital asset hosted wallets—will be mandated to submit information returns and provide payee statements for transactions involving digital assets conducted on behalf of customers, particularly in sale or exchange transactions.
Furthermore, the regulations will extend to real estate reporting entities, which are considered brokers concerning reportable real estate transactions. These entities will need to include the fair market value of digital asset consideration received by real estate sellers in reportable real estate transactions on filed information returns and provided payee statements. Additionally, these real estate reporting entities will also be required to file information returns and provide payee statements for real estate purchasers using digital assets for transactions involving real estate acquisitions.
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