- The IRS has clarified that a controversial crypto reporting rule requiring businesses to report transactions over $10,000 will not go into effect yet, as regulations still need to be issued.
- Confusion had spread about a provision in a 2021 infrastructure law that seemed to require this reporting starting in 2024. The IRS statement has provided some relief to crypto communities worried about how decentralized networks would comply.
- Uncertainty remains around who the rule would implicate and how it will eventually be interpreted and enforced. A crypto advocacy group has sued to block the rule, with that case currently on appeal.
The IRS has clarified that a controversial crypto reporting rule won’t go into effect yet. This rule would have required businesses to report crypto transactions over $10,000 like cash transactions. However, the IRS says regulations still need to be issued before the law goes into effect.
Confusion Over Crypto Reporting Requirement
In early January, confusion spread about a provision in a 2021 infrastructure law. Starting on January 1, 2024, it seemed that businesses had to report details on crypto payments over $10,000. This included the payer’s name, address, and SSN. Failure to report could lead to felony charges.
Many in crypto worried how this would work for decentralized networks. DAOs and stakers might not have individual payers to report.
IRS Clarification Provides Relief
But on January 17, the IRS clarified the rule isn’t in effect yet. Regulations are still needed before it will be enforced. This process involves public comment periods and can take years.
It’s still unclear who the rule implicates. “Trade or business” typically means employment transactions. But it’s debatable whether it includes activities like flipping NFTs or day trading.
Uncertainty Remains
A crypto advocacy group sued to block the reporting rule as unconstitutional. That case is currently on appeal.
So for now, the controversial reporting requirement is on hold. But questions remain about how it will eventually be interpreted and enforced. The IRS statement has at least temporarily relieved some fears in crypto communities.
