🌐IRS New Rules: Cryptocurrency Exchange Reporting Requirements Upgraded, How Should Investors Respond?
Starting in 2025, the IRS will implement new rules requiring centralized cryptocurrency exchanges such as Coinbase and Gemini to report trading activities, which means a major upgrade in the supervision of digital asset investors.
That is to say, starting this year, the IRS will require cryptocurrency exchanges to report transaction information based on the new 1099-DA form, which will be delivered to taxpayers and the IRS in early 2026. Failure to comply with reporting regulations may cause problems because the IRS already has records of relevant transaction data.
Third-party reporting requirements for decentralized platforms such as Uniswap and Sushiswap will be delayed until 2027. These platforms will only report the total proceeds of transactions because they cannot access the original purchase data to calculate the cost basis.
However, due to the lack of this cost basis, investors are required to track the costs of their transactions themselves to accurately calculate their gains or losses even if the reporting requirements are delayed.
In addition, investors in Bitcoin ETFs will also be affected by the new reporting requirements this year. ETF providers will provide investors with a 1099-B or 1099-DA form that covers sales proceeds and any taxable events that occur within the fund. Therefore, even if held for the long term, management activities within the fund may generate taxable gains or losses.
The good news is that the IRS announced automatic relief for centralized finance users under the new crypto tax law in 2025, which also alleviated investors' concerns in the short term. However, starting in 2026, investors will need to determine an accounting method with their brokers, otherwise the first-in, first-out (FIFO) method will be used by default, which will increase the tax burden.
Are you ready for the IRS's new reporting requirements for cryptocurrency transactions? Will these changes affect your investment strategy? Share your thoughts or insights in the comments section!