Shortly after South Korea made headlines by arguing that NFTs are not regulated, the United States took the opposite approach. Soon, U.S. investors in the non-financial sector will need to start reporting to the Internal Revenue Service (IRS).
Under the recently signed “H.R. 3684 Infrastructure Act,” NFTs are now considered “cash” and will be regulated accordingly. As a result, brokers and investors will be required to begin reporting to the IRS beginning in tax year 2023.
Twitter user and CPA James Yochum took the time to explain how this will affect the NFT space. As a result, investors will need to report any assets with cash equivalents of $10,000 or more, thus requiring creators and sellers to fill out an 8300 tax form for their assets. In addition, they will need to obtain a Social Security number and proof of identity from the buyer. Traders will have 15 days to complete the required information, and failure to do so will represent a felony.
All of this additional legislation highlights the disparity in regulatory requirements between countries around the world. Some countries have taken a tougher line than others, and it’s clear that in this instance, governments want a piece of the cryptocurrency pie. However, with the elite of the tech-savvy generation siding with the digital sector, a response is eagerly awaited.