Proposed Tax Rules for Digital Asset "Brokers"

Proposed Tax Rules for Digital Asset Brokers

Key Insights

• The Proposed Rule broadly defines brokers to include digital asset exchanges, payment processors, and persons who regularly offer to redeem digital assets that were created or issued by that person.
• Decentralized exchanges, front ends, and other “digital asset middlemen” may also be subject to tax reporting requirements if they are able to collect customer identity and gross proceeds information, even if they do not in fact collect such information.
• Brokers do not include:
  • Wallet providers whose software only allows users to control their private keys and that do not allow customers to access digital asset trading platforms;
  • Miners or validators who are solely engaged in validating distributed ledger transactions.