⚖️ Regulation & Legal: Crypto Taxation

The U.S. Treasury’s latest guidance on Form 1099‑DA underscores a zero‑basis risk that could trigger significant tax liabilities for crypto investors, especially those who have held assets for years without adequate record‑keeping. The form, effective for the 2026 tax year, will require issuers to report the fair‑market value of digital assets at the time of distribution, forcing investors to account for gains or losses retroactively. This shift is likely to increase compliance costs and could deter high‑frequency trading and liquidity provision, as market participants weigh the risk of unexpected tax exposure. Legislative changes highlighted by the Bitcoin Foundation reveal a broader regulatory tightening: new U.S. rules will treat Bitcoin, stablecoins, and staking rewards as taxable income, aligning them with traditional securities and commodities. The Tax Court’s recent decision upholding income tax on cryptocurrency rewards further cements this stance, signaling that crypto‑derived income will not enjoy special tax treatment.