New IRS Crypto Tax Reporting Rules To Begin In 2025, Here Is What to Know

The Internal Revenue Service (IRS) has shared a recent crypto tax requirement to report crypto transactions.

These rules will apply to brokers on centralized exchanges (CEXs). They are intended to foster better tax compliance and more accurate reporting of digital asset transactions.

The Form 1099-DA is a vital development towards the regulation of cryptocurrencies by the IRS.

Centralized Exchanges To Begin Reporting Transactions in 2025

Notably, brokers working on the centralized exchanges like Coinbase and Gemini will now have to inform the IRS about the user’s transactions via Form 1099-DA.

This form will contain data regarding acquisitions and disposals that will be also filed together with tax returns for the year 2025 by the beginning of the year 2026.

The Form 1099-DA will show the different transactions of the taxpayers including the purchasing and selling.

– Advertisement –

Nonetheless, they are not mandated to disclose the cost basis information, the initial purchase price of a stock that is used in determining capital gains or losses, until the taxation year of 2026.

This, as explained by Jessalyn Dean of crypto tax software provider Ledgible, is done in a step by step manner in order to make the process smooth for brokers and taxpayers.

For exchange-traded fund (ETF) investors, the process starts earlier. This year, ETF issuers are mandated to file 1099-B or 1099-DA forms.

They report the taxable occurrence like trading of shares or gains and losses in the ETFs. These measures seek to facilitate compliance without subjecting digital asset investors to new taxes.

Decentralized Platforms To Follow Suit by 2027

More so, other DeFi platforms such as Uniswap will also be subjected to crypto tax IRS reporting. However, these platforms will not start reporting until 2027.

They will only report the gross proceeds of the transactions. This is because decentralized systems do not have the information on cost basis.

It is a responsibility that still lies with the taxpayer. Furthermore, the IRS noted that these requirements will apply to brokers that take custody of digital assets during a transaction.

This includes registered trading platforms, digital asset wallet providers, and some digital asset payment processors.

The extended period for decentralized platforms can be attributed to the more challenging task of monitoring the transaction in the Peer-to-Peer networking system.

Crypto Tax: Regulatory Alignment With Trump Administration

Additionally, the new crypto tax laws are in line with other changes that have been made as Trump begins his second term.

His administration has demonstrated an interest in creating a more positive attitude toward cryptocurrencies.

This includes the creation of a Senate Crypto Subcommittee. This comes in line with recent pro-crypto policies aimed at supporting innovation and ensuring the stability of the market for investors and companies.

The recent crypto tax IRS guidance also highlighted DeFi brokers. Front-end providers should disclose detailed information about the customers and transactions.

These measures are anticipated to complement Trump’s plan of promoting the use of blockchain and digital assets.

Some of the prominent personalities in the crypto space like Anthony Pompliano have urged the government to come up with rules that foster innovation while protecting investors.

The SEC is also expected to change its approach in the next few years. Hence, the regulatory environment may change significantly in the coming years.