The IRS is finally catching up with crypto. After four years of work, the agency has finalized new digital asset regulations—and reporting officially begins with your 2025 tax return.
Starting next year, custodial crypto platforms such as Coinbase, Kraken, and Binance will be required to report taxable crypto transactions directly to the IRS using the new Form 1099-DA (Digital Asset Proceeds from Broker Transactions).
That means if you sell or exchange cryptocurrency through a custodial wallet or exchange, those transactions will now be reported—much like traditional stock trades are today.
What You’ll See on the New Form 1099-DA
The form includes key details such as your name, address, taxpayer identification number, the asset sold, the sale date, quantity, and total gross proceeds. For 2025, brokers only need to report the gross proceeds—the full amount you received before fees or costs. Beginning in 2026, they’ll also report cost basis, giving a clearer picture of your gains and losses.
Why This Matters
Until now, crypto reporting has been largely self-reported—creating confusion and mistakes. With 1099-DA in place, it will be much easier to calculate accurate gains and losses. However, it also means the IRS will have full visibility into your digital asset activity.
How Crypto Gains Are Calculated
The default method for determining which crypto units you sold is FIFO (first-in, first-out). This typically increases your taxable gain during rising markets because it assumes your earliest—and often lowest-cost—units are sold first.
If you want more control, you can use the specific identification method, which lets you choose which coins you’re selling. For 2025, you can apply this method in your own records without notifying your broker.
Tracking Across Multiple Wallets
The new regulations require crypto owners to track cost basis separately for each wallet or exchange. You can’t treat all your crypto as one big pool anymore. If you held crypto in multiple wallets on January 1, 2025, you’ll need to allocate cost basis to each one individually.
Crypto tax reporting just got more organized—and more visible. If you hold or trade digital assets, take time now to get your records in order so you’re ready for the 2025 changes.
If you’d like help understanding how these new crypto rules affect your situation, contact us to discuss your tax strategy.