Regulation
IRS Finalizes New Cryptocurrency Tax Regulations
Crypto platforms will be required to report transactions to the Internal Revenue Service, starting in 2026. However, decentralized platforms that do not hold assets themselves will be exempt.
These are the main lessons to be learned new regulations that the IRS and the U.S. Treasury Department finalized on Friday, essentially implementing a provision of the Biden administration’s Infrastructure Investment and Jobs Act, signed into law in 2021.
Cryptocurrency holdings are taxable even without these new regulations; however, there was no real standardization in how such holdings were reported to the government and individual investors. Starting in 2026 (covering transactions in 2025), crypto platforms will be required to provide a standard 1099 form, similar to those submitted by banks and traditional brokerages.
In addition to making it easier to pay taxes on cryptocurrencies, the IRS also said it is trying to crack down on tax evasion.
“We need to ensure that digital assets are not being used to hide taxable income, and these final regulations will improve the detection of noncompliance in the high-risk area of digital assets,” IRS Commissioner Danny Werfel said in a declaration.
But again, these regulations apply to “custodial” platforms (like Coinbase) that actually take ownership of clients’ assets. After pressure from the crypto industry, decentralized brokers that don’t take ownership are excluded from these rules.
In fact, the Blockchain Association (an industry lobbying group) called exclusion “a testament to the incredibly powerful voice of our industry and our community.”
The Treasury Department and the IRS have said they will cover these decentralized brokers with a separate set of regulations.