The Biden administration has proposed new regulations to enforce a revenue-generating provision from the 2021 infrastructure law, requiring additional reporting of cryptocurrency transactions to the IRS. However, Consensys, a leading blockchain software company, is urging the IRS to postpone the implementation of these rules due to concerns over clarity and the need for further guidance.

The proposed regulations, which were initially required to be finalized by the end of the year, have been delayed, and the Treasury Department and IRS are now providing a two-month public comment period followed by a hearing. This timeline makes it challenging for the administration to meet the year-end deadline for finalizing the new regulations.

In recognition of the likely delay, the proposal gives cryptocurrency brokers more time before being required to deliver more information to the IRS, with forms not being required until 2026, covering transactions in the 2025 tax year. Additionally, the proposed regulations exempt cryptocurrency miners and stakers, individuals who validate transactions, from the rules, as well as some peer-to-peer or "decentralized" exchanges.

This exemption is a significant win for the industry, which has sought clarifying language and exemptions since the initial debate over the infrastructure bill in 2021. When allies on Capitol Hill ran out of time to add clarifying language to the measure, the law gave broad latitude to Treasury and the IRS to implement the provision, giving industry supporters hope.

Consensys and other industry stakeholders are urging the IRS to take the time needed to ensure clarity and guidance on the new regulations, rather than rushing to meet an arbitrary deadline. By doing so, the IRS can ensure that the regulations are effective and efficient, and that the industry can comply with the new rules without undue burden or confusion.