Beginning from 2025, reports of cryptocurrency transactions made by Americans on centralized exchange platforms (CEXs) will be forwarded to the Internal Revenue Service (IRS).
For the upcoming tax year, there will be a new requirement for third parties to report crypto transactions. This is intended to strengthen compliance and make certain that digital asset activities are correctly taxed.
US Crypto CEXs to Report Transactions to IRS
Starting from next year, cryptocurrency brokers such as Coinbase and Gemini will keep a record of all transactions made by their users. These brokers will then provide a new tax form, known as the 1099-DA, which will detail both purchases and sales to both the taxpayer and the IRS for tax filing purposes. As reported by CNN, this information is expected to be included in the 2025 tax returns that are due to be filed early in 2026.
The 1099-DA form offers details about transactions. Yet, it’s important to note that brokers won’t have to disclose the cost basis until the 2026 tax year. In simpler terms, the ‘cost basis’ refers to the initial price at which a cryptocurrency was bought, and this figure is crucial for determining taxable profits or losses when filing taxes.
According to Jessalyn Dean, who is the Vice President of Tax Information at crypto tax software provider Ledgible, this phased rollout intends to make it smoother for both brokers and taxpayers as they navigate through this transition period.
On decentralized trading platforms such as Uniswap, the timeline for reporting is different. Starting from 2027, peer-to-peer transactions will be subjected to third-party reporting obligations. In contrast, decentralized platforms themselves won’t provide cost-basis details because they don’t have access to this information, so they’ll only report the total earnings instead.
According to the IRS, specific entities responsible for reporting are those who hold digital assets sold by their clients. These entities encompass operators of digital asset trading platforms that store customer assets, certain wallet providers hosting digital assets, digital kiosks, and processors of digital asset payments.
Investors in Bitcoin ETFs should anticipate receiving reports from external sources this year. The issuers of these ETFs will distribute either a 1099-B or 1099-DA form, which outlines taxable events such as share transactions (like sales) or any profits and losses within the fund.
Contrarily to what some may think, according to the US Treasury, these updates don’t create new taxes for digital asset investors. On the contrary, their purpose is to simplify compliance procedures and minimize unintentional mistakes.
US Crypto Tax Rules Ahead of Trump’s Inauguration
This report follows closely on the heels of the IRS releasing fresh cryptocurrency tax guidelines centering around DeFi services. According to our previous reports, these brokers are now obligated to provide comprehensive details about their customers and transactions. However, it’s important to note that the rules apply specifically to front-end DeFi services engaging with users, while the underlying protocols themselves remain exempt from these regulations.
Significantly, these regulations are planned for release around the time when Donald Trump is due to be inaugurated again. His return to the presidency has ignited increased support for cryptocurrencies, driven by policies that encourage blockchain advancements and digital assets.
In addition to other duties, his government’s plans involve setting up a special Senate committee for cryptocurrencies (let’s call it Crypto Subcommittee). This committee is intended to bring clarity and encourage innovation in the sector by providing a favorable regulatory environment. The optimistic market trend suggests that people are hopeful about the Trump administration possibly creating regulations that will be friendly towards cryptocurrencies.
In the current situation, Anthony Pompliano, a well-known proponent of Bitcoin, has offered suggestions to help Trump stimulate the sector’s expansion. Pompliano emphasized rules that encourage innovation while safeguarding investors, and more such proposals.
Under President Trump’s administration, I foresee changes in the policies of the U.S. Securities and Exchange Commission (SEC). This anticipated overhaul is expected to bring about a more welcoming stance towards cryptocurrencies, potentially leading to increased adoption and the establishment of clearer regulatory guidelines within the industry.
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2025-01-16 17:28