Starting in 2025, cryptocurrency transactions on centralized exchanges (CEXs) will be subject to new IRS reporting requirements, marking a significant change for digital asset investors.
These changes mean that transactions made through custodial accounts on platforms like Coinbase and Gemini will now be subject to third-party reporting for the first time.
New IRS rules
According to a CNN report, the Internal Revenue Service (IRS) has clarified that broker-dealers, which include custodial trading platforms, certain wallet providers, digital asset kiosks and certain payment processors, must report these transactions .
The information will be captured on a new form, the 1099-DA, which will detail all purchases and sales of digital assets. This form will be sent to the taxpayer and the IRS by early 2026. Taxpayers will need to include this information on their 2025 tax return. Failure to do so could result in discrepancies, as the IRS will already have this data on file .
Cost basis reporting, which refers to the initial purchase price of a digital asset, will not be required of broker-dealers until fiscal year 2026. Jessalyn Dean, vice president of tax information at Ledgible, explained that this delay could affect taxpayers’ ability to accurately calculate taxable gains. It is important to note that cost basis is crucial in determining gains or losses from the sale of assets.
For those engaging in decentralized platform transactions, the timeline is different. Peer-to-peer transactions on platforms like Uniswap and Sushiswap will not be subject to third-party reporting until 2027. These platforms will only report gross proceeds from transactions, as they do not have access to the necessary initial purchase price to calculate the cost basis.
Meanwhile, investors in spot Bitcoin exchange-traded funds (ETFs) will also be affected by reporting requirements this year. ETF providers will issue forms such as the 1099-B or 1099-DA, which will include not only the sales proceeds, but also any taxable events occurring within the fund.
Dean even advised Bitcoin ETF investors to seek advice from tax advisors, as taxable gains or losses may arise from the fund’s internal management activities, even if the underlying assets are held for the long term.
IRS Relief Notice
The latest development comes less than a month after the IRS introduced automatic relief for centralized finance users facing new crypto tax regulations in 2025, requiring no immediate action. This relief addresses complications related to the Section 6045 custodian broker rules, which required CeFi brokers to report transactions using specific accounting methods.
Failure to comply with FIFO could increase tax liabilities, but taxpayers can get around this by using their own records or crypto tax software. Starting in 2026, users will need to select an accounting method with their brokers to avoid FIFO treatment by default.
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