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Cryptocurrency Update

Laura L. Brownfield
General Counsel

The Senate Finance Committee released a request for information over the summer asking the public for its thoughts on a variety of topics surrounding digital assets and how things such as cryptocurrencies should fit into existing laws and whether new legislation is needed. This request came after Treasury and the IRS published proposed regulations on August 25, 2023, addressing the required information reporting for certain digital asset sales or exchanges and rules requiring crypto platforms to track transactions, report on customers’ gains and losses, and provide a new Form 1099-DA to customers.

The IRS has also included in the definition of digital assets non-fungible tokens (“NFTs”). In an effort to clear up reporting requirements and better identify and track tax cheats, the rules require reporting by decentralized exchanges, which have long argued that they do not track that information and that doing so would undercut a major reason investors are attracted to decentralized finance platforms. The proposed IRS rules requiring more reporting on digital assets are opening the door to an onslaught of reactions over what assets and what brokers should be subject to the new requirements.

Note: This material was developed by Community Foundation for Southeast Michigan. It is published with the understanding that neither the publisher nor the author is engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a professional advisor should be sought.