Treasury Sets New Crypto Tax Reporting Rules

Starting in 2025, cryptocurrency transactions on centralized platforms like Coinbase and Gemini will be subject to third-party reporting to the IRS, marking a significant shift in tax compliance for digital asset investors. Brokers, including custodial trading platforms and digital wallet providers, will report transactions using a new form, the 1099-DA, which must be included in taxpayers' 2025 returns due in 2026. Although brokers will report gross sales, they will not provide cost basis information until 2026. For decentralized platforms, third-party reporting will not begin until 2027, and these platforms will only report gross proceeds without cost basis details. Additionally, investors in Bitcoin ETFs will also receive reporting through either a 1099-B or 1099-DA related to their fund activities. These changes aim to enhance tax compliance and reduce errors in reporting digital asset transactions.