Patrick McHenry, Chairman of the Financial Services Committee of the US House of Representatives, harshly criticized the crypto rules that the US Treasury Department and the Internal Revenue Service IRS are planning to introduce. McHenry said the proposed rule-making notice of digital asset reporting requirements is another front of the Biden administration’s ongoing attack on the digital asset ecosystem. The deputy made the following statements in the continuation of his statements:
The Biden administration must end its efforts to kill the digital asset ecosystem in the US and work with Congress to finally deliver clear rules of the road for this industry. I look forward to advancing my bipartisan solution (Keep Innovation in America Act) to rectify these misguided reporting requirements, protect the privacy of market participants, and enable the digital asset ecosystem to thrive here in the USA.
Both the Treasury Department and the Revenue Service have announced some new regulations regarding crypto. Both institutions chose to describe their digital asset brokerage firms as “trading platform, digital asset payment provider and wallet developer”. However, the new rules are still not official. If approved by Congress, it will be effective from 2026 for the 2025 tax year. On the other hand, cryptocurrency mining and stakers are exempt from brokerage regulations.
The proposed regulations are aimed at making it harder for crypto investors to avoid paying taxes. Under the proposal, US-based exchanges like Coinbase and Kraken will be required to submit annual reports to their clients and the Internal Revenue Service. DeFi protocols and NFT marketplaces will also have to abide by these rules. Thus, cryptocurrency brokerage houses, mostly stock markets, will be subject to almost the same rules as brokerage firms selling investment contracts. According to the law passed in Congress, the ministry was required to publish new regulations by December 31, 2023. The Ministry and its affiliated institution, the IRS, announced the regulations only 4 months before the end of this period.