Senators Urge Quick Implementation of Cryptocurrency Broker Tax Reporting Rules

In a joint letter to the U.S. Department of the Treasury and the Internal Revenue Service (IRS), Senators Elizabeth Warren and Angus S. King, Jr. are calling for the expedited enforcement of recently proposed tax reporting regulations for cryptocurrency brokers. They express concerns about the two-year delay in implementing the rules, which they believe could lead to significant revenue losses for the federal government.

Estimates suggest that the IRS has been losing approximately $50 billion annually since 2022 due to a lack of understanding or intentional avoidance of tax obligations by crypto traders. The senators support the proposed regulations, particularly the clear definitions of "brokers" and "digital assets." Brokers are defined as parties that facilitate crypto sales while knowing the seller's identity and transaction details, while "digital asset" refers to a value recorded on a secure cryptographic ledger or similar technology.

However, they strongly object to the scheduled 2026 effective date, arguing that it contradicts the 2021 Infrastructure Investment and Jobs Act's directive for new crypto broker reporting requirements, starting with tax returns filed in 2024. The lawmakers emphasize that the delay could result in lost tax revenue that would have been generated in the initial years under the new regulations.

They urge swift action, emphasizing that delays could provide opportunities for crypto lobbyists to challenge the government's efforts to regulate this rapidly growing and largely unmonitored sector. Senators Warren and King have requested updates on the agencies' progress by October 24, 2023, underlining that "the time to act is now."