Beginning in 2026, cryptocurrency platforms will be required to inform the Internal Revenue Service about users’ transactions. Platforms that are decentralized and do not directly manage assets, however, will be outside the scope of this mandate.
This directive comes from recently finalized regulations by the IRS and the Department of Treasury, representing a key aspect of the Infrastructure Investment and Jobs Act initiated under the Biden administration in 2021.
Even prior to these regulations, taxpayers were obligated to report any profits from the sale of cryptocurrencies and other digital assets. The new rules, effective from 2026 for transactions in the previous year, introduce a standardized reporting mechanism via the 1099 form, aligning cryptocurrency platforms with traditional financial institutions and brokerages in terms of tax documentation.
The move aims not only to streamline tax compliance for cryptocurrency transactions but also to bolster efforts against tax evasion.
“To prevent the concealment of taxable income through digital assets, we’re implementing these regulations to enhance our capacity to detect noncompliance in this high-risk area,” IRS Commissioner Danny Werfel commented in an announcement.
Nevertheless, the new rules specifically concern “custodial” platforms, like Coinbase, which custody customer assets. Decentralized exchanges, having successfully advocated for themselves, remain unaffected by this particular regulatory framework.
The Blockchain Association, a key advocate for the industry, heralded their exemption as evidence of the industry’s significant influence.
The Treasury and IRS have indicated plans to address the regulatory status of decentralized platforms in upcoming rules.
Compiled by Techarena.au.
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