ICBA expressed support for an Internal Revenue Service proposal designed to clarify the tax treatment of digital assets.
Background: The IRS proposal would implement a provision of the Infrastructure Investment and Jobs Act that amended the definition of a “broker” subject to information reporting requirements to include individuals who effectuate digital asset transfers. The proposal also would include digital assets in securities definitions.
Level Playing Field: In a comment letter to the IRS, ICBA said the proposed rule would help to provide taxpayers with relevant information to accurately meet their filing obligations, clarify reporting requirements for digital assets brokers, and dispel questions about the overall tax treatment of digital assets. It also would promote a level playing field by applying comparable information reporting requirements to brokers of digital and traditional assets, ICBA said.
Digital Asset Brokers: In its comments, ICBA said it strongly supports the agency’s proposed “digital assets broker” definition, which includes decentralized finance exchanges and decentralized autonomous organizations. ICBA said it agrees with the IRS’s logic that these entities are controlled by people in a position to know critical information about users executing taxable digital assets transactions.
ICBA View: ICBA has repeatedly called on policymakers to ensure new policies directed at the broader crypto sector fully reflect its risks and to prioritize research on the specific effects of digital assets on community banks and their customers.
More: Recent Main Street Matters posts from ICBA Senior Vice President of Digital Assets and Innovation Policy Brian Laverdure cover recent crypto collapses, the evolving regulatory environment for digital assets, and the policy debate over treating cryptoassets as securities or commodities.