Navigating the Blockchain Landscape: Recent IRS Guidance on Convertible Virtual Currency and the Treasury’s Continued Delay Regarding Broker Regulations


This article explores recent developments in the U.S. federal taxation of virtual currencies by the Internal Revenue Service (IRS) and ongoing delays in broker regulations by the Department of Treasury. The IRS has issued recent guidance through Rev. Rul. 2023-14, which addresses the U.S. federal tax implications of receiving validation rewards via the “staking” mechanism in proof-of-stake cryptocurrencies. The foregoing ruling maintains the IRS’s stance that convertible virtual currencies should be treated as property for federal tax purposes. This article examines the details of Rev. Rul. 2023-14, its implications for taxpayers, and the broader challenges in the evolving cryptocurrency landscape. Despite these developments, uncertainty persists, emphasizing the importance of staying informed and in compliance with IRS guidance.

Brief History of U.S. Federal Taxation of Virtual Currency

The IRS provided initial guidance regarding virtual currency transactions in a list of “Frequently Asked Questions” (FAQs) contained in IRS Notice 2014-21,[1] which generally stated…

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