Driving Innovation with Tax Clarity
We believe that tax clarity for digital assets will empower industries and individuals to innovate, invest, and lead in the digital asset ecosystem.
As digital assets present novel tax issues, new guidance is needed to avoid uncertainty and compliance issues for market participants.
Straight-forward guidance for following tax policy in digital assets to foster innovation, growth, and compliance.
The Policy Issues
Reporting Requirements for Digital Asset Transactions
Current tax reporting requirements, further exacerbated by IRS proposals, for digital asset transactions are onerous and not well-suited to the nature of these assets, placing a significant burden on both individuals and businesses.
The Digital Chamber is advocating for the simplification of reporting requirements for digital asset transactions without infringing on user privacy. By proposing the adoption of more streamlined processes, we aim to reduce the compliance burden on taxpayers while improving accuracy and ease of tax reporting.
- TDC Comments: IRS Draft Form 1099-DA | November 2024
- TDC Response: IRS Draft Form 1099-DA | June 2024
- TDC Comments: Proposed Regulations on Broker Reporting for Digital Asset Transactions | November 2023
- TDC Response: Senate Finance Committee’s Solicitation for Policy Input on Digital Asset Taxation | September 2023
- TDC Comments: OECD on Crypto Tax Policy | April 2022
Classification and Treatment of Digital Assets
The classification and treatment of digital assets for tax purposes remains ambiguous, leading to confusion and compliance challenges for investors and businesses alike. This uncertainty complicates tax filings and financial planning for those involved in the digital asset space.
The Digital Chamber is actively engaging with policymakers at Treasury and on Capitol Hill to advocate for clear, consistent tax guidelines for digital assets. We are working to educate lawmakers on the unique characteristics of digital assets to ensure that tax policies are fair, practical, and promote innovation.
Tax Treatment for Decentralized Finance (DeFi)
The rapid evolution of DeFi has outpaced the development of tax policies governing these transactions, creating a grey area for users and service providers. Without clear guidance, participants in the DeFi ecosystem face significant uncertainty regarding their tax obligations.
The Digital Chamber is at the forefront of discussions with tax authorities, such as the Senate Finance Committee, to clarify the tax treatment of DeFi transactions. We are advocating for policies that recognize the unique aspects of DeFi, aiming to establish clear, equitable tax guidelines that support the growth and development of the DeFi sector.
Our Impact
We are committed to creating a tax and regulatory landscape that supports innovation while ensuring fair and efficient compliance.
Pioneering the Providing Tax Clarity for Digital Assets Act
Our advocacy and strategic partnerships with congressional staff have positioned us at the forefront of tax policy reform. We successfully spearheaded the drafting of the Providing Tax Clarity for Digital Assets Act, which aims to codify the U.S. federal income tax treatment of digital asset rewards acquired through consensus mechanisms (i.e., staking rewards). Our influence in shaping this legislation underscores our commitment to fighting for comprehensive and equitable tax clarity in the digital asset space.
Shaping Practical Broker Reporting Regulations
Our proactive engagement and detailed comment letter significantly influenced the final broker reporting regulations. Through persistent advocacy with the IRS and Treasury, we ensured non-custodial and DeFi platforms were excluded from reporting requirements until a more thoughtful approach is proposed. Additionally, our efforts established a de minimis threshold for certain stablecoin transactions and NFTs, reducing the reporting burden for smaller transactions. These victories demonstrate our commitment to supporting innovation while ensuring practical compliance measures.
Securing Clarity for Cryptocurrency Reporting
Our advocacy for clarity led to a Senate colloquy – a formal discussion championed by Senators Mark Warner and Rob Portman – clarifying that the bipartisan Infrastructure Investment & Jobs Act’s provision on cryptocurrency broker reporting requirements should solely be aimed at brokers, not other ecosystem participants.
Relevant Tax News
