New U.S. Tax Reporting Requirements for Cryptocurrencies


Because of new IRS regulations that went into effect on January 1, traders are increasingly concerned about whether their actions could land them in legal hot water.

Stay in the know on crypto by frequently visiting Crypto News Today

When businesses or professional traders obtain cryptocurrency valued at more than $10,000, they must notify the Internal Revenue Service of their transactions.

Those who disobey may be charged with felonies.

The Infrastructure Investment and Jobs Act, Section 6050I, was first passed by Congress in November 2021 and included this reporting requirement, which went into effect on January 1.


The IRS hasn’t provided much direction or explanation on who is genuinely required to report, despite the possibility of facing legal ramifications.

CryptoCaster Quick Check:

Due to the lack of a physical location or social security number, traders employing decentralized financial protocols—amateur and professional alike—have expressed stresses about whether or not they are subject to the law.

Blockworks was informed by Shehan Chandrasekera, CoinTracker’s head of tax strategy, that 6050I applies to anybody who engage in “trade or business.” These people could be individuals or businesses.

“To put it simply, they have to conduct business as usual when conducting any kind of activity,” Chandrasekera stated. “You don’t have a trade or business if you are a simple investor in cryptocurrencies, which is the case for most US users. Consequently, 6050I has no effect on you.

To ascertain whether a DAO contributor qualifies as a “trade or business,” some inquiries to take into account would be:

  • Is contributing to the DAO your full-time, self-employed job? 
  • Is this your main source of income? 
  • Do you do this full-time throughout the year?

“You run a “trade or business” and may be subject to 6050I if the answer to all of the above questions is “yes” (there may be additional qualitative questions depending on the situation),” Chandrasekera stated.


Airdrop farmers, for instance, can be justified using a similar reasoning. A person receiving a one-time airdrop allocation is probably not subject to reporting responsibilities, but those who farm airdrops as their full-time job are probably subject to reporting requirements.

Regarding stakeholders, Chandrasekera clarifies that those who are stakeholder on large exchanges and get incentives but have another primary source of income would probably not have to file an IRS report. However, there will be reporting obligations for an individual or group who manages a professional staking pool and receives commission payments.

Nevertheless, according to Cameron Browne, a certified public accountant (CPA) and partner at Darien Advisors, a Web3 crypto tax advising business, the specifics of how traders and individuals engage in staking may also have an impact on whether they are required to disclose, as per Blockworks.

“Maybe if they’re trading via an organization and assert $10K in yield farming rewards. Not if they’re just dealing as individuals, according to Browne. “That would definitely subject a few of my clients who trade through partnerships, corporations, or S corporations.”

The IRS has not yet provided clarification on what counts as trade or business activity and what does not.

“There are links between this arbitrary standard and a great deal of other provisions in the IRS code. This has been made clearer for case-related facts in a few court instances. However, there isn’t a clear-cut guideline, according to Chandrasekera.

The lack of clarity has prompted the cryptocurrency think tank Coin Center to take action on their own. Coin Center filed a lawsuit against the US Treasury Department in June 2022, claiming the IRS restrictions are illegal.

It will be evident how difficult this need is when someone donates in this way, but does so anonymously by sending us [ether or bitcoin] to our public addresses. In that scenario, who could we possible list as the sender? The Treasury Department has not yet responded to any of these inquiries, according to a blog post by Coin Center executive director Jerry Brito.

In the meanwhile, as they figure out how to remain compliant, Brito says, the Coin Center team will keep fighting the law in court.

According to Chandrasekera, many taxpayers outside of the cryptocurrency industry would rather be treated as a trade or business since it allows them to deduct business-related expenses—a benefit that is not extended to what the IRS considers to be “hobbies.”CRYPTOCASTER® - DECENTRALIZED FREEDOM!

We hope you appreciated this article. Before you move on, I was hoping you would consider taking the step of supporting CryptoCaster’s journalism. 

From  Elon Musk, Larry Fink(BlackRock) to Jamie Dimon(JP Morgan Chase) a number of billionaire owners have a powerful hold on so much of the hidden agendas’ which eludes the public concerning the paradigm shift juxtaposed by cryptocurrency and web3 emerging technologies. CryptoCaster is different. We have no billionaire owner or shareholders to consider. Our journalistic efforts are produced to serve the public interest in crypto development and institutional disruptions – not profit motives.

And we avoid the trap that befalls much U.S. and global media – the tendency, born of a desire to please all sides, to engage in false equivalence in the name of neutrality and retail consumer protection. While fairness and transparency dictates everything we do, we know there is a right and a wrong position in the fight against fiat global banking interest and monetary reconstruction precipitated by the emerging crypto ecology.

When we report on issues like the FTX, Binance and Ripple crisis, we’re not afraid to name who or what is uncovered. And as a crypto sentinel, we’re able to provide a fresh, outsider perspective on the global monetary disruption – one so often missing from the insular American and European media bubble. 

Around the world, readers can access the CryptoCaster’s paywall-free journalism because of our unique reader-supported model. That’s because of people like you. Our readers keep us independent, beholden to no outside influence and accessible to everyone – whether they can afford to pay for news and information, or not.

We thankyou for the on-going support our readers have bestowed monetarily. If you have not considered supporting CryptoCaster, if you can, please consider supporting us just once from $1 or more of Bitcoin (satoshi) or Eth, and better yet, support us every month with a little more. Scroll further down this page to obtain CryptoCaster’s wallet addresses.

Thank you.

Kristin Steinbeck
Editor, CryptoCaster

Please Read Essential Disclaimer Information Here.
© 2024 Crypto Caster provides information. does not provide investment advice. Do your research before taking a market position on the purchase of cryptocurrency and other asset classes. Past performance of any asset is not indicative of future results. All rights reserved.

Contribute to CryptoCaster℠ Via Metamask or favorite wallet. Send Coin/Token to Addresses Provided Below.
Thank you!
BTC – bc1qgdnd752esyl4jv6nhz3ypuzwa6wav9wuzaeg9g
ETH – 0x7D8D76E60bFF59c5295Aa1b39D651f6735D6413D
MATIC – 0x7D8D76E60bFF59c5295Aa1b39D651f6735D6413D
LITECOIN – ltc1qxsgp5fykl0007hnwgl93zr9vngwd2jxwlddvqt


You may also like