Benzinga - The Internal Revenue Service will be putting a pause on its contentious $10,000 cryptocurrency tax rule.
What Happened: As reported by Decrypt, the IRS and the Treasury Department jointly issued a statement on Tuesday, signaling their updated stance concerning the new tax rule. This rule has generated extensive concern in the crypto space, primarily due to its mandate for Americans to report any cryptocurrency transactions exceeding $10,000.
According to the agencies, enforcement of this rule will be postponed. The statement read, “Businesses… do not have to report the receipt of digital assets the same way as they must report the receipt of cash until Treasury and IRS issue regulations.”
This announcement confirms what industry experts had been speculating for weeks – the rule won’t be enforced until after a thorough review and a public comment period.
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The rule’s language has prompted questions about who it targets, as it requires anyone receiving over $10,000 in crypto as part of a “trade or business” to report their payer. This has been the standard practice for cash transactions.
Why It Matters: Applying this rule to cryptocurrency transactions is challenging due to the decentralized nature of cryptocurrencies. For example, those receiving payments from decentralized autonomous organizations (DAOs) or from staking might find it difficult to pinpoint a single-payer.
In 2020, Coin Center, a crypto advocacy group, launched a lawsuit against the Treasury Department and the IRS, claiming the new law to be unconstitutional. The case is currently being appealed.
Price Action: At the time of writing, Bitcoin (CRYPTO: BTC) was trading at $42,859, down 0.01% in the last 24 hours, according to Benzinga Pro.
Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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