With Biden’s signature of the Infrastructure Investment and Jobs Act (Report on recent US international tax developments – 12 November 2021 (ey.com)), the scope of 1099-B and cost basis reporting will be expanded to include digital asset transactions. The rules cover both “brokers”, a broader term than “banks”, the exact scope of which is yet to be determined by the IRS.
For banks, as most Swiss banks have only relatively limited exposure to this reporting (essentially US-resident clients) and it is often delegated, the immediate impact will be quite limited. However, many banks are currently evaluating crypto hosting, and this is nonetheless an early reminder that banks can expect digital asset reporting requirements from the EU next year [European Commission publishes action plan for fair and simple taxation: A detailed review | EY – Global] and can also expect CRS to be expanded to formally include digital assets.
For non-banks, such as crypto exchanges, the impact of these rules is likely to be limited, but that remains to be confirmed, whilst the coming European rules are almost certain to affect these businesses.
In the context of digital asset transactions, valuations are particularly important (as of course is developing the custody tools to execute trades and capture trade data, and the AML expertise to evaluate crypto-sourced wealth). If you have or are planning to include digital assets custody, we would be pleased to organize a discussion with our digital assets tax and regulatory experts.
