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US Treasury Issues Crypto Tax Regime for 2025, Delays Rules for Non-Custodians — TradingView News
The US Treasury Department has issued the long-awaited tax regime for cryptocurrency transactions, establishing filing rules for digital asset brokers that will begin with transactions made next year, but has postponed some of its most controversial decisions about brokers who never take hold of crypto clients.
New Internal Revenue Service (IRS) rules for cryptocurrency brokers released Friday require trading platforms, hosted wallet services and digital asset kiosks to present information about the movements and earnings of customers’ assets. Such assets will also include, in very limited circumstances, stablecoins such as Tether’s {{USDT}} and Circle Internet Financial’s {{USDC}} and high-value non-fungible tokens (NFTs), although the IRS explicitly declines to address the long-standing battle over whether tokens should be considered securities or commodities.
While this rule focuses on the more obvious platforms like Coinbase Inc. Current currency and Kraken, non-custodial cryptocurrency firms, such as decentralized exchanges and unhosted wallet providers, are getting only temporary respite from the new storage requirements. Popular crypto platforms that handle a “substantial majority” of transactions can no longer wait for rules, the agency argued, but the other issues require further study and will have their own rules “by the end of the year.”
“The Treasury Department and the IRS do not agree that non-custodial participants should not be treated as brokers,” according to explanations included in Friday’s rule. “However, the Treasury Department and the IRS would benefit from further consideration of issues involving non-custodial sector participants.”
The final rule for most commonly used brokers begins with transactions on January 1, 2025, leaving crypto taxpayers with another year of filing to calculate their 2024 returns themselves in the meantime, though cryptocurrency firms have already moved to adapt. The IRS has given brokers an additional year until 2026 to begin tracking the “cost basis” for assets, or the amount each was originally purchased for.
Real estate transactions paid for with cryptocurrencies after January 1, 2026 will also need to be reported, the regulation said. “Real estate reporting persons” will be required to submit the fair market value of the digital assets used in such transactions.
A 2021 congressional infrastructure bill set the stage for the Treasury IRS to establish this formal approach to cryptocurrencies, and the industry has since been frustrated by a continually delayed process. The eventual proposal attracted 44,000 public comments.
“Thanks to the bipartisan Infrastructure Investment and Jobs Act, digital asset investors and the IRS will have better access to the documentation they need to easily file and review taxes
“returns,” Aviva Aron-Dine, acting assistant secretary for fiscal policy, said in a statement. “By implementing the law’s reporting requirements, these final regulations will help taxpayers more easily pay taxes owed under current law, while reducing tax evasion by wealthy investors.”
IRS Commissioner Danny Werfel said the final regulations welcomed public comments.
“These regulations are an important part of a broader effort to address high-income individual tax compliance. We need to ensure that digital assets are not used to hide taxable income, and these final regulations will improve the detection of noncompliance in the high-risk space of digital assets,” he said. “Our research and experience demonstrate that third-party reporting improves compliance. Additionally, these regulations will provide taxpayers with much-needed information that will reduce burden and simplify the process of reporting their digital asset activity.”
Controversial rule
The process of drafting this controversial tax rule has sparked widespread concern in the industry that the U.S. government has gone too far in imposing impossible requirements on miners, online forums, software developers, and other entities that help investors but that traditionally would not be considered brokers and do not have the customer information or disclosure infrastructure that would allow them to comply.
The IRS said it recognizes that cryptocurrency brokers should not include those “who provide validation services without providing any other functions or services, or persons who are engaged solely in the business of selling certain hardware or licensing certain software, the sole function of which is to allow individuals to control the private keys used to access digital assets on a distributed ledger.”
US tax authorities estimate that around 15 million people will be affected by the new rule and that around 5,000 companies will have to comply.
The IRS said it sought to avoid some burdens on users of stablecoins, especially when used to purchase other tokens and in payments. Basically, an ordinary cryptocurrency investor and user who does not earn more than $10,000 in stablecoins in a year is exempt from reporting. Sales of stablecoins, the most frequent in cryptocurrency markets, will be counted collectively in an “aggregate” report rather than as individual transactions, the agency said, although more sophisticated, high-volume stablecoin investors will not be eligible.
The agency said that these tokens “unequivocally fall within the statutory definition of digital assets as they are digital representations of the value of fiat currency that are recorded on cryptographically protected distributed ledgers,” so they could not be exempt despite their goal of adhering to a constant value. The IRS also said that completely ignoring such transactions would “eliminate a source of information about digital asset transactions that the IRS can use to ensure compliance with taxpayer reporting obligations.”
But the IRS added that if Congress passes one of its bills that would regulate stablecoin issuers, the tax rules may need to be revised.
The tax agency also faced complex legal arguments in determining how to handle NFTs, according to its extensive notes on that topic, and the agency decided that only taxpayers who earn more than $600 in a year from their sales NFTs require their aggregate proceeds to be reported to the agency. government. The resulting documentation will include taxpayers’ identifying information, how many NFTs were sold, and what the profits were.
“The IRS intends to monitor NFTs reported under this optional aggregate reporting method to determine whether this reporting impedes its tax enforcement efforts,” according to the rule text. “If abuse is detected, the IRS will reconsider these special reporting rules for NFTs.”
As part of its efforts, the IRS released its definition of digital assets and the various activities covered by the legislation on Friday.
The IRS also established a safeguard for certain reporting requirements “that taxpayers may rely on to allocate the unused digital asset base to the digital assets held in each of the taxpayer’s wallets or accounts beginning on January 1, 2025.”
Earlier this year, the IRS released a proposed 1099-DA form to track cryptocurrency transactions — the form that millions of cryptocurrency investors would receive from their brokers.
The IRS made clear on Friday that any attempt in this rule to assign buckets to cryptocurrencies is not intended to strengthen a side in the industry’s ongoing battle with regulators — particularly the U.S. Securities and Exchange Commission (SEC) — over whether tokens are securities or commodities. That debate is now raging in several cases before federal judges, and while the SEC is only willing to admit that bitcoin {{BTC}} is well out of the agency’s reach, Commodity Futures Trading Commission Chairman Rostin Behnam has said that Ethereum’s ether {{ETH}} is also a commodity.
Such a position “is beyond the scope of these final regulations,” the IRS explained.
Nikhilesh De contributed reporting.
Bitcoin AND Etherealalong with the rest of the top 10 cryptocurrencies by market cap, appear to be in hibernation on Thursday morning.
At the time of writing, the Bitcoin Price is still below $65,000 and 2.2% lower than it was this time yesterday, according to CoinGecko data. Things are worse for the Ethereum Pricewhich is 3.7% lower than 24 hours ago at $3,185.22. The drop in ETH’s price is identical to that of Lido Staked Ethereum (stETH), a liquid staking token for Ethereum.
In recent days, falling prices have led to the liquidation of derivative contracts worth $225 million, according to Coin glassAnd about half of that, about $100 million, was liquidated in the last 12 hours.
When a trader is liquidated, it means that their position in the market has been forcibly closed by an exchange or brokerage due to a margin call or insufficient collateral. Margin is especially important when it comes to leveraged positions, which allow traders to control a multiple of their deposit, such as opening a $10,000 position with only $1,000 in their account.
Now that Bitcoin has been in the red for three days in a row, there is a chance that the world’s oldest and largest cryptocurrency could sink even further, BRN analyst Valentin Fournier said in a note shared with Decrypt.
“Bitcoin has closed in the red for three days in a row, with one-way trading showing limited resistance from bulls. Ethereum had a slightly positive Monday with strong resistance from bears who have won the last two days,” he wrote. “This momentum could take BTC to the $62,500 resistance or even the $58,000 territories.”
Looking ahead, Fournier said BRN’s strategy will be to “reduce exposure to Bitcoin and Ethereum and find a better entry point after the dip.”
This is despite Federal Reserve Chairman Jerome Powell’s comments yesterday on interest rates being widely regarded as accommodating and indicative of FOMC rate cuts in September.
Singapore-based cryptocurrency trading firm QCP Capital said the rally in stocks, which sent the S&P 500 up 1.6% from Wednesday’s close, was not felt in cryptocurrency markets.
“Cryptocurrencies have seen a broad sell-off overnight and into this morning,” the firm wrote in a trading note. “The market remains poised as traders pay close attention to daily ETH ETF outflows and further supply pressure from Mt Gox and the US government.”
Meanwhile, the other top-ranking coins are showing mixed performance.
Solana (SOL) is down 7.2% since yesterday to $169.13. Things are even worse for its most popular meme coins. In the past 24 hours, the most popular meme coins Dogwifhat (WIF) are down 12% and BONK (BONK) is down 9%, according to CoinGecko data.
Their dog-themed competitor, Ethereum OG Dogecoin (DOGE), the only meme coin in Coingecko’s top 10, is down nearly 4% since yesterday and is currently trading at $0.1205.
XRP (XRP) dropped to $0.608, which is 7% lower than it was at this time yesterday.
Binance’s BNB Coin (BNB) has kept pace with BTC and is currently trading at $571, down 2.4% from yesterday. Toncoin (TON), the native token of The Open Network, is down just 0.4% over the past day.
This leaves the stablecoins USDC (USDC) and Tether (USDT), both of which are stable as they maintain their 1:1 ratio with the US dollar.
The Securities and Exchange Commission (SEC) will hold another closed-door meeting with Ripple on Thursday, as the market hopes for a possible resolution to the legal battle between the two entities.
However, the cryptocurrency market remains relatively bearish, with the price and trading volume of XRP down in the last 24 hours.
Ripple holders take no risk
At press time, XRP is trading at $0.60. The altcoin’s price has dropped 6% over the past 24 hours. During that time, trading volume was $27 million, down 27%.
The SEC met before with the digital payment company on July 25. While the outcome of that meeting remains unknown, the Sunshine Act Notice for Thursday’s meeting includes one additional topic of discussion from the July 25 closed meeting: the instituting and resolving injunctive relief. That has market participants speculating whether a settlement is imminent.
In an exclusive interview with BeinCrypto, Ryan Lee, Lead Analyst at Bitget Research, noted that:
“This meeting will discuss possible resolution options for the Ripple Lawsuit. The founder of Ripple Labs said that a legal settlement could be announced soon. If an official settlement plan is released, it could positively impact XRP’s price movement.”
However, an assessment of XRP’s price movements on a 4-hour chart shows a spike in bearish bias as the market awaits the outcome of this crucial meeting. Its Moving Average Convergence/Divergence (MACD) indicator readings show that its MACD line (blue) has crossed below its signal line (orange).
XRP 4 Hours Analysis. Source: Trading View
Traders use this indicator to gauge price trends, momentum, and potential buying and selling opportunities in the market. When an asset’s MACD is set this way, it is a bearish signal that suggests selling activity is outweighing buying momentum.
Additionally, the altcoin relative strength index (RSI), at 46.08, is currently below its neutral 50 line and in a downtrend. This indicator measures overbought and oversold market conditions for an asset.
To know more: How to Buy XRP and Everything You Need to Know
XRP 4 Hours Analysis. Source: Trading View
At 43.83 at the time of writing, XRP’s RSI suggests a growing preference among the market participants for tokin distribution.
XRP Price Prediction: Derivatives Traders Exit Market
The XRP derivatives market has also seen a decline in trading activity over the past 24 hours. According to Coinglass, derivatives trading volume has plummeted 18% and open interest has dropped 10% during that period.
Open interest refers to the total number of outstanding derivative contracts, such as options or futurethat have not yet been resolved. When it drops, traders close their positions without opening new ones. This is a bearish signal that reflects a lack of confidence in any potential positive price movement.
According to Lee, the outcome of the meeting with the SEC “would have a significant impact on the price movement of the token.” If the outcome is favorable, the price of the token could rise towards $0.75 in August.
To know more: Ripple (XRP) Price Prediction 2024/2025/2030
XRP 4 Hours Analysis. Source: Trading View
On the other hand, if no favorable resolutions are reached, the price could plummet to $0.50.
Disclaimer
In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto strives to provide accurate and unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult a professional before making any financial decisions. Please note that our Terms and conditions, Privacy PolicyAND Disclaimers They have been updated.
Bitcoin is now the dominant force in the cryptocurrency market, surpassing 53% of the total cryptocurrency market, a stronger share than it has been in the past three years.
Bitcoin’s market cap now stands at $1.27 trillion, second according to CoinGecko data. In contrast, the total cryptocurrency market cap is $2.43 trillion, with Ethereum occupying 15.9% of the market, worth $389 billion.
Bitcoin’s rise to dominance this year is unusual, as altcoins typically do better than Bitcoin in a bull market. While meme coins made a strong comeback during Bitcoin’s rally to all-time highs earlier this year, the so-called “wealth effect” It has not been appreciated as much by mid-range coins, such as Ethereum and Cardano.
“ETF flows fundamentally alter market dynamics,” he wrote Meltem Demirors, former chief strategy officer at CoinShares, tweeted Wednesday: “BTC gains no longer translate to alts and the longer tail of crypto.”
Bitcoin’s takeover has continued even as the market cap of Tether (USDT) continues to grow, the world’s largest stablecoin and the third-largest cryptocurrency after BTC and ETH. Stablecoins are backed by fiat currencies and are excluded from some measures of Bitcoin dominance due to fundamentally different value models.
The surge continued to pace even after the launch of Ethereum spot ETFs last week, which ironically culminated in a news sell-off event, and net outflows from new investment products since they were launched. This went against the predictions of K33 Search so far, which predicted that ETFs would catalyze ETH’s growth over the next five months.
Despite the poorer performance of the alts, there is reason to believe that they are ready to bounce back very soon.
CryptoQuant CEO Ki Young Ju said Tuesday that whales are “preparing for the next altcoin rally,” as limit buy orders for assets other than BTC and ETH are on the rise.
The executive shared a chart showing how the “cumulative difference between purchase volume and sales volume” has increased in recent months.
“The indicator measures the difference between buy and sell orders over a year,” CryptoQuant told Decrypt. A buy/sell order is a pre-set request to buy or sell a cryptocurrency if it hits a certain price level, which creates resistance and support levels.
“If the trend is up, it means that more people are placing buy orders, showing strong interest in buying,” CryptoQuant said.
By Ryan-Ozawa.
After Monday’s crash, in which BTC fell by several thousand dollars, the scenario has repeated itself once again in the last 12 hours, with the asset falling to a 2-week low of $63,300.
Alt coins followed suit, with most of the market in the red today. SOL and XRP lead the way from the higher cap alts.
BTC Drops To $63.3K
After a violent Thursday last week, when BTC crashed to $63,400, the asset went on the offensive over the weekend and surged above $69,000 on Saturday, as the community prepared for Donald Trump’s appearance at the 2024 Bitcoin Conference in Nashville.
His speech was followed by more volatility before the cryptocurrency settled around $67,500 on Sunday. Monday started off rather optimistically for the bulls as bitcoin hit a 7-week high of $70,000.
However, he failed to maintain his run and conquer that level decisively. On the contrary, he was rejected bad and dropped to $66,400 by the end of Monday. Tuesday and Wednesday were less eventful as BTC remained still around $66,500.
The last 12 hours or so have brought another crash. Bears have pushed the leading digital asset down hard, which has fallen to a 2-week low of $63,300 (on Bitstamp), leaving over $200 million in liquidations.
Despite the current rebound to $64,500, BTC’s market cap has fallen to $1.270 trillion, but its dominance over alts is recovering and has reached 52.6%.
Bitcoin/Price/Chart 01.08.2024. Source: TradingView
The Alts are back in red
Ripple’s native token has been at the forefront of the market challenge in recent days as pumped up to a multi-month high of over $0.66. However, its run was also interrupted and XPR fell by more than 6% in the last day to $0.6.
The other big loser among the larger-cap alternatives is SOL, which has lost 8% of its value and is now struggling to get below $170.
The rest of this altcoin cohort is also in the red, with ETH, DOGE, BNB, AVAX, ADA, SHIB, and LINK all seeing drops between 2 and 5%.
The total cryptocurrency market cap lost another $70 billion overnight, falling below $2.4 trillion today on CG.
Cryptocurrency Market Overview. Source: QuantifyCrypto SPECIAL OFFER (sponsored)
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