The IRS is rolling out a fresh set of crypto tax reporting requirements, with significant implications for brokers, centralized exchanges, and decentralized platforms. These new rules aim to enhance compliance, ensure transparency, and streamline the reporting of digital asset transactions. Here’s a breakdown of what crypto investors and platforms need to know:
Centralized Exchanges to Report via Form 1099-DA in 2025
Starting in 2025, centralized exchanges will be required to file Form 1099-DA with the IRS. Key highlights include:
Scope of Reporting: Brokers must disclose acquisition and disposal details of crypto transactions.
Effective Timeline: Reports for 2025 transactions must be submitted by early 2026.
Cost Basis Exclusion: Cost basis data will only become mandatory starting with the 2026 tax year, giving brokers time to adjust.
For ETF investors, reporting has already started in 2024, with issuers required to file 1099-B or 1099-DA forms. These changes aim to streamline compliance while avoiding new tax burdens for digital asset holders.
DeFi Platforms to Begin Reporting in 2027
Decentralized platforms will join the IRS reporting requirements in 2027. They will be responsible for reporting:
Gross Proceeds Only: DeFi platforms won’t report cost basis due to the decentralized nature of transactions.
Broker Scope: Applies to platforms handling custody, including trading platforms, wallet providers, and payment processors.
This extended timeline reflects the complexities of monitoring peer-to-peer transactions in DeFi ecosystems.
Aligning Regulations with Industry Growth
These rules align with the broader pro-crypto stance of the current U.S. administration, which aims to:
Support blockchain innovation.
Ensure regulatory clarity for businesses and investors.
Foster stability in the crypto market.
The IRS has also issued guidance for DeFi brokers to report detailed transaction data, reinforcing transparency.
Key Takeaways for Investors and Platforms
For Investors: Prepare for increased scrutiny of crypto transactions and ensure accurate tax filings.
For Platforms: Brokers must upgrade systems to meet the new reporting standards by the stated deadlines.
This regulatory push underscores the growing mainstream adoption of crypto and the need for com