The United States Internal Revenue Service (IRS) has announced temporary relief on a controversial rule affecting crypto investors on centralized exchanges (CeFi).
Temporary Relief for CeFi Brokers
FIFO calculates capital gains by assuming the oldest assets purchased are sold first, which can lead to higher tax liabilities. Shehan Chandrasekera from Cointracker highlighted the potential fallout of imposing this rule prematurely, noting that investors might inadvertently sell their lowest-cost-basis assets first. The temporary relief extends until December 31, 2025.
Legal Battle Over New Reporting
This update follows a lawsuit filed by the Blockchain Association and Texas Blockchain Council against the IRS on December 28. The plaintiffs argue that new reporting rules infringe on constitutional rights by requiring brokers to disclose digital asset transaction details.
Time for Compliance and Reform
With the temporary relief, crypto brokers have a two-year window to adapt their systems, while taxpayers gain more time to navigate their accounting options. As the 2027 deadline approaches, the crypto industry will likely see heightened advocacy for reforms balancing innovation with regulatory compliance.
The temporary deferral of accounting rules offers much-needed time for crypto brokers and taxpayers to adjust to the new requirements. Ongoing discussions may lead to fairer and more transparent regulatory mechanisms.
