Tag Archives: Department of Treasury

Crypto To See Tighter Tax Rules Starting In 2026

The Biden administration took a long-delayed step against tax evasion in cryptocurrency markets, though it left some work unfinished amid fierce lobbying by companies like Coinbase, The Wall Street Journal reported.

The Treasury Department adopted a final rule Friday requiring many cryptocurrency platforms to report information about their users’ transactions to the Internal Revenue Service. Officials say the measure should deter tax evasion by making it clear to would-be miscreants that the IRS knows how much they owe.

It will also help law-abiding crypto investors by giving them a simple 1099 form each year, similar to those banks and brokers have long provided customers. In the absence of formal IRS rules, many crypto investors rely on an unregulated cottage industry of expensive, and often imprecise, service providers to estimate tax obligations.

The U.S. Department of The Treasury posted:

As part of the Biden-Harris Administration’s implementation of the bipartisan Infrastructure Investment and Jobs Act (IIJA), the U.S. Department of the Treasury (Treasury), and the Internal Revenue Service Service (IRS) today released final regulations on the IIJA’s reporting requirements with longstanding reporting requirements for traditional financial services.

Owners of digital assets have always owed tax on the sale of exchange of digital assets, and the IIJA did not change that or impose any new taxes on digital assets. It simply created reporting requirements, similar to those that already applied to traditional financial services, to help taxpayers file accurate returns and pay taxes owed under current law.

The final regulations announced today will require brokers to report gross proceeds on the sale of digital assets beginning in 2026 for all sale in 2025. Brokers will be required to also report information on the tax basis for certain digital assets beginning in 2027 for sales in 2026…

The U.S. IRS posted:

The U.S. Department of The Treasury and Internal Revenue Service today issued final regulations requiring custodial brokers to report sales and exchanges of digital assets, including cryptocurrency. These reporting requirements will help taxpayers to file accurate tax returns with respect to digital asset transactions, which are already subject to tax under current law.

These final regulations reflect consideration of more than 44,000 public comments received last fall on the proposed regulations. They require brokers to report certain sale and exchange transactions that take place beginning in calendar year 2025 and will be reported on the soon-to-be released Form 1099 -DA. The regulations implement reporting requirements by the Infrastructure Investment and Jobs Act, enacted in 2021…

…The final regulations require reporting by brokers who take possession of the digital assets being sold by their customers. These brokers include operators of custodial digital asset trading payments (PDAPs). The majority of digital asset transactions today occur by using the brokers…

In my opinion, these new rules could be the start of the regulation of cryptocurrency. This might be annoying to those have been buying or selling crypto without government oversight.

Department of Treasury, Federal Reserve, and FDIC Post Release About SVB

The Department of the Treasury, Federal Reserve, and FDIC posted a joint statement in the form of a press release. It was posted on March 12, 2023, and is in regards to SVB and Signature Bank. From the press release:

“The following statement was released by Secretary of the Treasury Janet L. Yellen, Federal Reserve Board Chair Jerome H. Powell, and FDIC Chairman Martin Gruenberg:

“Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system. This step will ensure that the U.S. banking system continues to preform it’s vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.

“After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.

“We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.

“Shareholders and certain unsecured debt holders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be removed by a special assessment on banks, as required by law.

“Finally, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.

“The U.S. banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry. Those reforms combined with today’s actions demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe.”

CNBC reported that U.S. regulators on Sunday shut down New York-based Signature Bank, a big lender in the crypto industry, in a bid to prevent the spreading banking crisis.

The banking regulators said depositors at Signature Bank will have full access to their deposits, a similar move to ensure depositors at the failed Silicon Valley Bank will get their money back.

The regulators shuttered Silicon Valley Bank on Friday and seized its deposits in the largest U.S. banking failure since the 2008 financial crisis – and the second-largest ever. The dramatic moves come just days after the tech-focused institution reported that it was struggling, triggering a run on the bank’s deposits.

Signature is one of the main banks to the cryptocurrency industry, the biggest one next to Silvergate, which announced its impending liquidation last week. It had a market value of $4.4 billion as of Friday after a 40% sell-off this year, according to FactSet.

To stem the damage and stave off a bigger crisis, the Fed and Treasury created an emergency program to backstop deposits at both Signature Bank and Silicon Valley Bank using the Fed’s emergency lending authority.

The FDIC’s deposit insurance fund will be used to cover depositors, many of whom were uninsured due to the $250,000 guarantee on deposits. While depositors will have access to their money, equity and bondholders at both banks are being wiped out, a senior Treasury official said.

Overall, I think the decisions outlined in the press release will be a relief to people who otherwise might have lost their savings in SVB or Signature Bank. It is good that this group of people won’t have to lose their entire savings just because their bank failed.