Internal Revenue Service Releases Latest Broker Rule Guidance

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On Friday, the Internal Revenue Service (IRS) released the latest version of its controversial guidance on the “broker rule.” This rule, which pertains to tax reporting requirements for cryptocurrency brokers, was first proposed in August of 2023.

At the time, the ambiguous language of the proposed rule sparked concerns that it would adversely affect various parts of the crypto industry, from wallet providers to decentralized exchanges.

However, in the latest version of the guidance, the IRS clarified that custodial brokers (such as exchanges like Kraken and Coinbase) would be subject to the new rules, while decentralized, non-custodial platforms will be exempt.

This decision was praised by Coin Center Chief Communications Officer Neeraj Agrawal, who stated that it was a relief that self-custodial applications like DEXs would not be considered brokers.

The new rules will go partially into effect in 2025, but the IRS also acknowledged the need for further consideration of issues involving non-custodial participants in the industry.