IRS Proposes Eased Reporting Standards For Crypto Taxes In Latest 1099-DA Draft Release

The US Internal Revenue Service (IRS) has made significant changes to the 1099-DA crypto taxation form, which is intended exclusively for cryptocurrency broking accounts. This activity is a crucial part of the larger plan to arrange and clarify the process for reporting transactions pertinent to a digital asset.

The announcement was made via X on Aug 9 by Ji Kim, General Counsel, Head of Global Policy, and Digital Assets at the Crypto Council for Innovation. Kim stressed that the most recent version of the 1099-DA form, which is now accessible on the IRS website, is compliant with the June-released final broker standards. Reports on cryptographic asset transactions must be sent to clients using this document, which will be required as of 2025.

One significant change to the draft is the removal of several controversial reporting requirements. Initially, brokerage firms were required to report wallet addresses, transaction IDs, and asset acquisition times for all assets.

These requirements raised significant concerns in the crypto community over privacy and security. The need to disclose wallet addresses and transaction IDs for every transaction was viewed as a potential risk, as it could expose sensitive information to unauthorized parties.

Crypto Sector Pushes For Balanced Regulations

The draft has been notably revised to remove several controversial reporting requirements. Initially, brokerage firms were required to provide wallet addresses, transaction IDs, and asset acquisition times for all assets.

However, this mandate raised significant privacy and security concerns within the crypto community. There was concern that disclosing wallet addresses and transaction IDs could expose sensitive information. This fear stemmed from the risk of unauthorized access. Consequently, there was a push to keep these details confidential.

The IRS and Treasury would issue a formal news release, but they are still fine-tuning how they tax cryptocurrencies. This may include an invitation for more public feedback. Despite serious risks, the crypto sector is advancing by acknowledging the need for support to prevent restrictive regulations.

These potential regulations could be impractical and undermine privacy and data security rights related to digital assets. However, The sector is working to address these challenges proactively. This approach aims to protect both innovation and individual rights.

Furthermore, the author’s views are for reference only and shall not constitute investment advice. Before purchasing, please ensure you fully understand and assess the products and associated risks.