If you are a U.S. trader, you simply cannot afford to ignore the tectonic shift underway in IRS Crypto Tax 2025. This isn’t just about filing taxes anymore; it’s about the entire ecosystem of digital asset reporting changing forever, leaving most retail traders scrambling to catch up. Let’s break down the new Form 1099-DA rules and ensure you are ready for this compliance revolution.
Just this week, I’ve seen at least two new Youtube videos with click-bait titles and a blog article from another crypto tax service. Seems that, now that the Oct 15th USA extension tax deadline is past, everyone is focusing on what you need to know before the end of the year. Which is CRUCIAL! You must know what’s coming while you still have time to act!
So what is changing in the world of reporting your crypto transactions for your taxes? And how much clickbait is in these videos and articles? Here’s the main thing I’m discovering as I’m researching the ultimate source: the irs.gov website.
Crypto tax reporting is changing for USA investors: as of 2025, brokers and exchanges with a US presence will be required to send info to the IRS about your transactions.
At first, this info will be limited to the following: the amount and name of the token you sold (possibly up to 18 digits), the date you sold, and the dollar value of the proceeds you received.
For 2025, exchanges will NOT be required to provide cost basis info, although they can voluntarily provide it if they choose to. (This will change in 2026 when they will be required to provide cost basis info on any assets purchased in your account after Jan 1, 2025. Anything purchased before that they can claim innocence on and not report or only voluntarily report.)
Other info that exchanges don’t have to report:
• Wrapping and unwrapping tokens (which is where you change your Ethereum tokens for the WETH token, often so you can send ETH on a different blockchain then where it is currently located.)
• Liquidity pool transactions
• Staking transactions
• Lending transactions
• Short sales of digital assets
• Notional principal contract transactions (whatever that is!)
Side note: one of the blog articles is claiming that you also may not receive reports for “de minimis” transactions (under $10,000 of “qualified” stablecoins or under $600 of certain NFT transactions). I have found a federal document discussing this, but it’s unclear to me whether or not the exchanges will include the transactions on your 1099-DA. Here’s the federal document in case it makes more sense to you!
In any and all cases, just because the exchange isn’t required to report it to the IRS doesn’t mean that you, the taxpayer, do not need to report info on those transactions. Something to keep in mind.
The form looks like it will be separating out the transactions based on:
1.- If they are long-term or short-term (tokens held less than one year)
2.- If they are “covered securities” (i.e. they were bought after Jan 1, 2025, when exchanges are being required to track — and in the future report — the cost basis of the tokens bought or if they are assets purchased before Jan 1, 2025)
The exchange will also be reporting if they are including cost basis info voluntarily or not.
So that’s the basics, at least for USA-based crypto investors. Now let’s talk about the implications.
The main implications are that:
1.- If you are doing transactions in US-based exchanges, your transactions WILL be reported directly to the IRS. So if you’re one of those people who thinks that you don’t need to report crypto transactions or believe the myth that you only need to report crypto transactions when you cash out your final results and send them back to your bank, here’s your “heads up!” warning!
2.- If you are a crypto investor who kept it simple with all of your transactions in one exchange, your crypto tax reporting will become a lot easier, particularly in 2026 when the exchanges will be required to report your cost basis. You’ll have one statement with all the info you need from your exchange to give to your accountant and you’ll be set. HOWEVER, if you are a crypto investor who moved ANY assets from one place to another or did any of the types of transactions that aren’t required to be reported (particularly in a blockchain wallet or through a Defi exchange that doesn’t report to the IRS), you will need to make sure your reporting is crystal-clear on which assets went where and were disposed of. After all, the info the IRS will receive will just list your gross proceeds. It’s up to you to make sure that your cost basis is reported so you don’t overpay your taxes.
3.- The other thing to consider is that, for any assets moved into an exchange from another place, the exchange may be reporting the incorrect long-term/short-term status of that asset when you dispose of it which can have some pretty significant tax implications. For instance, if you have BTC that you bought and moved to your Ledger in 2016, then moved back to Coinbase in August 2025 and then sold, Coinbase may report that sale as a short-term sale because it only knows you had the asset since it arrived in your wallet in August. For a high-income investor, the difference between the tax owed on a short-term transaction versus a long-term transaction can be 17% of the gains or greater!
4.- You will also want to follow up with your tax software or tax filing professional to make sure that your transactions aren’t double-reported — i.e. if your exchange sends you a 1099-DA that gets automatically added to your taxes and then you also submit your full CoinTracking 8949 form (that includes the same transactions but with all the cost basis and correct purchase dates listed), you’ll want to make sure that your $100k gains in Bitcoin sales is only reported ONCE overall. (Who wants to pay taxes on the same transaction twice?!) At the same time, it’s important to report a MINIMUM of what is shown on your 1099-DA’s or you’ll be flagged for a future audit.
Now here’s a couple times that the videos and blog articles are claiming that may or may not be true:
1.- One of the videos is claiming that the 1099-DA will be collecting wallet addresses and implies correctly that, if the IRS wants to investigate you, it will have a list of all your wallet addresses and it will be easy to accuse you of moving assets and then disposing of them and not reporting your sales. And since you didn’t report your sales, the IRS will be happy to slap you with fines and penalties and other consequences. The IRS (and other governments) may be moving towards this, but so far the current 1099-DA form does NOT ask for your wallet address info. In fact it specifically asks for an account number from the Exchange and specifies that the account number is the internal account number the exchange assigns to your overall activity, NOT your wallet address. Of course, this may change in the future.
2.- The same video claimed that the 1099-DA will also be reporting any transactions that were sent out from the exchange. As far as I can tell, this is NOT the case. The 1099-DA is ONLY reporting on disposals of assets. (Which has implications of its own, namely: if you DO send an asset elsewhere and dispose of it, the exchange is NOT reporting that at all and it is up to you to report both the cost basis and the proceeds to the IRS.) Again, this may change in the future.
3.- The blog article (and the summary provided by AI on Google if you search the query “timezone and irs reporting for crypto trades”) is claiming that transactions must be reported as per the UTC time zone. This only matters for December 31st transactions, but it’s not something that I’m finding confirmed in the irs.gov website. Usually transactions are reported in your local timezone. In any case, just be aware that there could be a discrepancy between your records and your exchange records reported to the IRS if any transactions closed late on December 31st, much as there are often discrepancies in my broker-reported transactions for trades closing in the final three days of the year.
So there you have it: rules for USA-based crypto investors and their tax reporting and definitely changing.
And if you’re based elsewhere, I also saw an article recently about how other governments are working towards making crypto transactions more traceable and reportable so they can collect their taxes. Something to keep an eye on!
p.s. We wrote a report last year on how the rules changed for USA tax investors as of Jan 1, 2025 including the one thing I didn’t mention up above: USA tax payers are supposed to decide, BEFORE they sell anything in 2025, which tax method they are using to report their gains. (First in first out, last in first out, etc.) If you’d like to get caught up on the report, catch that here.
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