The United States Internal Revenue Service (IRS) and the Department of the Treasury have recently issued a joint statement indicating that businesses do not have to report digital asset transactions exceeding $10,000 yet.
This measure will remain in effect until both agencies introduce proposed regulations. During this period, they plan to seek public feedback by opening up the process for comment.
This update follows a previous announcement from the agencies, which clarified that businesses do not have to report digital asset transactions in the same way as cash transactions at the moment.
Originally, the Infrastructure Investment and Jobs Act , which came into effect on January 1, had mandated that businesses report cryptocurrency transactions over $10,000 , treating them similarly to cash transactions. This was intended to bring reporting standards for digital assets in line with cash’s standards.
However, with the latest announcement , the existing rules that were in place before the Infrastructure Investment and Jobs Act will continue to apply. According to these regulations, cash transactions exceeding $10,000 that are received in the course of business must be reported using Form 8300, known as “Report of Cash Payments over $10,000 Received in a Trade or Business .” Such reports should be submitted within 15 days of the transaction.
The IRS stated :
“Treasury and the IRS intend to issue proposed regulations to provide additional information and procedures for reporting the receipt of digital assets, giving the public an opportunity to comment both in writing and, if requested, at a public hearing.”
Back in 2022, Coin Center, a prominent cryptocurrency advocacy group, has filed a lawsuit against the IRS and the Treasury. In it, the organisation challenged the constitutionality of a cryptocurrency tax-reporting mandate in recent infrastructure legislation.
The legal action was targeting a specific provision of the law. This, if enacted, would make businesses and individuals report any cryptocurrency transactions exceeding $10,000. Coin Center argue d that the implementation of this rule would essentially create a sweeping surveillance system, impacting the average American.
Central to the non-profit research and advocacy organization lawsuit is concern over the privacy implications of this reporting requirement. The mandate for detailed disclosure of personal data in transactions above the $10,000 threshold poses a significant privacy concern in the cryptocurrency sphere, a domain where users have traditionally valued and protected their anonymity.
Coin Center dedicates itself to exploring and addressing public policy issues related to cryptocurrencies and blockchain technology. Their work encompasses a thorough analysis of the regulatory environment and policy implications concerning these rapidly developing technologies.
In a recent development, Coin Center chose not to reply to a request from US Senator Elizabeth Warren. The Massachusetts Democrat sent a detailed letter last month to several industry entities. Cryptocurrency exchange Coinbase and various industry groups like Coin Center were among the letter’s recipients.
Warren’s inquiry sought specific information about the number of former defense and law enforcement officials employed by these organizations, including Coin Center.
The context of Warren’s inquiry related to concerns over cryptocurrencies’ potential role in financing terrorist organizations, such as Hamas. This aligns with broader Congressional efforts to understand and address issues surrounding the use of digital currencies in illicit activities.