Starting in 2025, the IRS is bringing in some new rules for crypto reporting, and it’s going to shake things up for both centralized and decentralized exchanges. If you’re trading on crypto trading platforms in the US, you’ll want to pay attention.
New Rules for Centralized Exchanges
Basically, any crypto transactions made through centralized exchanges like Coinbase or Gemini will be reported to the IRS for the first time ever. Yeah, you read that right. The IRS is rolling out a new form called 1099-DA for brokers, which covers all kinds of custodial trading platforms, wallet providers, and payment processors. This means that your trading activities will be reported to the IRS, and you’ll receive a copy of the form by early 2026. So, if you’re still trading on crypto platforms with no fees, make sure you’re ready to comply.
But here’s the kicker: the cost basis reporting (the original purchase price of your digital assets) won’t be required until the 2026 tax year. Jessalyn Dean from Ledgible said this might make it hard for some people to figure out their taxable gains. The cost basis is pretty crucial for figuring out your gains or losses when selling assets.
The Decentralized Side of Things
Now, if you’re more into decentralized platforms, the timeline is a bit different. Transactions on platforms like Uniswap and Sushiswap won’t have to report until 2027. And they’ll only report the gross proceeds since they don’t know your original purchase price.
And as for Bitcoin exchange-traded funds (ETFs), they will also have to comply with these new reporting rules. ETF providers will send out forms like the 1099-B or 1099-DA that will report not just the proceeds from your sales but also any taxable events within the fund. This is pretty big, so if you’re investing in spot Bitcoin ETFs, it might be a good time to consult a tax advisor.
Understanding the 1099-DA Form
Now, let’s talk about the 1099-DA form a bit more. You’ll need to be familiar with what it captures. It’s all about documenting your digital asset transactions, including buying and selling. You’ll have to report this info in your tax returns to avoid any discrepancies.
Key Parts of the 1099-DA Form:
- Transaction Details: When, what type, and how much for each transaction.
- Cost Basis: What you originally paid for the digital asset, required starting in 2026.
- Proceeds: The total amount you made from selling your digital assets.
Getting everything right on the 1099-DA is super important for compliance. Keep good records of your transactions, and you might want to look into crypto tax software to help.
Tips for Compliance
This is all a lot to take in, but there are ways to make it easier on yourself.
Compliance Tips:
- Keep Detailed Records: Document all your transactions with as much detail as possible.
- Use Crypto Tax Software: This can help you track everything and generate accurate tax reports.
- Talk to Tax Professionals: They’ll know the ins and outs of the regulations.
- Choose an Accounting Method: Starting in 2026, you’ll need to pick one with your brokers to avoid automatic FIFO treatment.
By following these tips, you should be able to navigate the new reporting requirements with a little less stress.
Summary: Preparing for Changes Ahead
In summary, the IRS's new rules are a big deal. They’re changing the way crypto trading platforms in the US operate, and you’ll have to adjust your trading strategies and compliance practices accordingly. Staying informed, keeping your records straight, and maybe consulting with a professional is probably a good idea. The landscape of cryptocurrency trading is about to get a lot more interesting.
