IRS Sets Sights On Decentralized Exchanges and NFTs With Proposed Tax Rules

IRS Sets Sights On Decentralized Exchanges and NFTs With Proposed Tax Rules The DeFi community is up in arms over new tax guidance from the U.S. Treasury Department for crypto exchanges, hosted wallet providers, and payment processors. On Aug. 25, The Treasury Department released a nearly 300-page-long document in response to the 2021 Infrastructure Investment and Jobs Act, which outlined crypto token reporting requirements for various ecosystem participants. The proposed changes are slated to take effect for the 2025 tax year. The rules make an effort to provide clarity, with definitions for what businesses constitute crypto brokers as well as a new tax form, 1099-DA, that such brokers will be required to file. Decentralized exchanges (DEXs), NFT trading platforms, and wallet providers that offer services related to the trading of digital assets appear to be deemed brokers, meaning they would be required to comply with the proposed regulations. The proposed rules impose reporting requirements for brokers of all types of digital assets, including stablecoins, cryptocurrencies, and non-fungible tokens (NFTs). These intermediaries would also be required to collect and share information about their customers with the IRS