Crypto Broker Reporting Rules Raise Question of Who Must Comply

The IRS’s final regulations exempting foreign cryptocurrency brokers from reporting details of sales and exchanges leave vague who the rules apply to, since many domestic brokers don’t host a physical location in the US.

The agency released the reporting requirements for decentralized exchanges last month, instructing those exchanges—known as DeFi—providing “trading-front-end service” to report information of sales and exchanges on their platform.

The requirements apply only to US brokers, underscoring the concern that decentralized brokers will disassociate themselves from the US as many don’t have a physical presence in this country. Foreign crypto exchanges can skip the reporting mandate ...