CEXs Must Report Crypto Transactions to IRS Starting in 2025
Starting in 2025, US crypto investors will see changes in tax reporting. Centralized trading platforms like Coinbase and Gemini must report transaction data to the IRS directly. Key points include:
- Introduction of form 1099-DA summarizing annual cryptocurrency activity.
- IRS will access reported data starting early 2026 to identify discrepancies in filings.
- Custodial accounts on centralized platforms are subject to this requirement; decentralized platform transactions have different rules.
- Reporting for wallet-to-wallet trades on decentralized platforms will start in 2027.
Cost basis reporting is delayed to 2026, meaning investors must manually calculate gains and losses for 2025. Spot bitcoin ETF investors will receive either a 1099-B or a 1099-DA for taxable events.
This reporting is a compliance measure aimed at improving tax filing accuracy. Decentralized exchanges will report gross transaction proceeds only, lacking access to users' purchase prices.
Temporary Relief for Crypto Holders in 2025
The IRS issued temporary relief under Section 1:1012–1(j)(3)(ii) for crypto holders using centralized exchanges in 2025. This allows them to document sales using personal records or tax software instead of being forced to use FIFO accounting, addressing challenges from new custodial broker regulations.