Morning Minute: The White House and IRS Target Foreign Crypto Holdings

Taxes are going to be more of a headache for those using offshore exchanges if this proposal passes. But does the move make sense?

Morning Minute is a daily newsletter written by Tyler Warner. The analysis and opinions expressed are his own and do not necessarily reflect those of Decrypt. Subscribe to the Morning Minute on Substack.

GM!

Today’s top news:

The Trump White House has been definitively positive on crypto and its need for regulation in the U.S.

And now we’re seeing one of the first major impacts, in a big crackdown.

The White House is reviewing a new IRS proposal that would require Americans to report and pay taxes on foreign crypto accounts.

The proposal includes rules modeled after FBAR and FATCA, the same frameworks used for offshore bank accounts.

This comes after Treasury pushed new reporting obligations for “digital asset accounts” held abroad, but the definition of foreign account is intentionally broad. It could include:

The proposal is complex, but the core idea is simple: if you’re a U.S. taxpayer and you hold crypto with any foreign entity, the IRS wants visibility and reporting.

“Implementing CARF would discourage U.S. taxpayers from moving their digital assets to offshore digital asset exchanges. Implementing CARF would promote the growth and use of digital assets in the United States and alleviate concerns that the lack of a reporting program could disadvantage the United States or U.S. digital asset exchanges.” - previous White House statement

Is this a big change?

Well, it depends on whether you’ve been paying your crypto taxes.

There are seemingly 4 cohorts of crypto taxpayers in the US:

So this change really only affects cohort #2 above.

For those who have been playing by the book, taxes are always reported and paid on all transactions. But now, those who have been skirting some rules may have to re-evaluate their framework.

The rationale from the White House makes sense here. If they want crypto to grow in America, they also want it held in America (self-custodied or via centralized exchanges like Coinbase). It’s easier to track and regulate this way.

So closing the foreign loopholes makes sense, even though this is one unlikely to drive a big uptick in tax revenue. It’s more about the spirit of the statement.

America is open for business for crypto in 2025—so hold your crypto onshore.

A few Crypto and Web3 headlines that caught my eye:

In Corporate Treasuries / ETFs

In Memes / On-chain Movers

Here’s a rundown of major token, protocol and airdrop news from the day:

Here is the list of other notable headlines from the day in NFTs:

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