New IRS crypto rules for 2026: Key changes and how to file

The IRS is bringing cryptocurrency into the same reporting framework as traditional financial assets. For years, digital asset transactions relied on self-reporting, which placed the full tracking burden on crypto investors.

By expanding third-party crypto tax reporting requirements, the IRS aims to reduce the tax gap and improve compliance across all digital asset transactions. IRS Form 1099-DA plays a key role in this transition, as it’s the new dedicated reporting form for crypto dispositions.

In this article, we’ll explain the new IRS crypto rules, talk about what’s changing for investors, and explore how these updates affect your 2025 tax returns.

What are the important changes for the 2025 tax year?

The 2025 tax year marks a major shift in how digital asset transactions are reported to the IRS. While the tax treatment of cryptocurrencies as property remains the same, the way the IRS identifies activity has changed. Instead of asking investors to volunteer information about transactions, the IRS receives some of those details from third parties like crypto exchanges.

The goal is to bring reporting for crypto in line with the Infrastructure Investment and Jobs Act of 2021, which mandated that digital asset facilitators operate under the same transparency standards as traditional stockbrokers.

Here’s how IRS crypto regulations are changing:

• Broker reporting: Centralized exchanges are now legally required to send certain transaction data to the IRS.
• Wallet-level tracking: You have to track your assets based on individual crypto wallets rather than as one combined pool.
• Staggered data rollout: Exchanges will initially report only your total sales as gross proceeds, so during this first rollout year, you’re still responsible for providing the original purchase price (cost basis) for each asset.

Let’s look closer at the most important updates.

IRS Form 1099-DA

Form 1099-DA is the IRS’s new information return designed specifically for digital assets transactions. While some platforms previously issued IRS Form 1099-MISC for rewards or IRS Form 1099-B for limited transaction types, those forms didn’t fully reflect how digital assets change value and ownership.

Now, digital asset brokers will issue Form 1099-DA to report taxable disposal events. This form captures dispositions like selling crypto for fiat currency, exchanging one digital asset for another, and spending crypto on purchases. These transactions represent taxable dispositions, which makes them subject to capital gains reporting.

Cost basis reporting

During the early rollout phase, brokers are only required to report gross proceeds, or the total amount you received from a disposition. They’re not yet required to report your cost basis, which is the original price you paid for the asset plus any adjustments such as transaction fees. Because the IRS only sees gross proceeds, it’s up to crypto investors to determine their own cost basis and calculate any resulting gain or loss using IRS Form 8949.

For example, if you sold one Bitcoin (BTC) for $60,000, the IRS will see a $60,000 gross proceeds amount on your Form 1099-DA. Without your own records showing you bought the BTC for $55,000, the IRS could treat the entire $60,000 as gain if you cannot substantiate your cost basis. So you’ll need to use Form 8949 to report your cost basis, calculate the resulting gain or loss, and reconcile with the amounts reported on your Form 1099-DA.

Wallet-by-wallet accounting

Previously, many crypto investors used a universal pool method to calculate gains and losses. This allowed them to treat all holdings of a specific digital asset as one pool, regardless of where those assets were held. You could buy Ethereum (ETH) on one exchange and sell it on another, then apply specific identification across all wallets and accounts to select the most tax-advantageous lot.

But new IRS regulations mandate a wallet-by-wallet or account-by-account approach, where you must track and report the cost basis for crypto based on where each asset is stored. For example, if you sell BTC from a Coinbase account, you can only use the cost basis of the BTC held in that specific Coinbase account to calculate your capital gain or loss.

DeFi exemption

In April 2025, Congress repealed a rule that would have required certain decentralized finance (DeFi) platforms and non-custodial service providers to report transactions on Form 1099-DA. The rule was criticized as impractical because these platforms often lack the central authority or technical means to collect know-your-customer data and issue tax forms.

However, this repeal only removes the reporting burden from the platforms themselves — it does not change your tax obligations as a user. If you trade on Uniswap or use a MetaMask wallet, for example, you won’t receive a Form 1099-DA. But you’re still legally required to report all gains, losses, and income from these platforms on your tax return, including swaps, liquidity pool activity, and staking rewards.

Increased enforcement

The IRS no longer relies on self-reporting alone, and has expanded its use of analytics and third-party data matching. By cross-referencing 1099-DA data with blockchain analytics and other information sources, the IRS can more easily identify taxpayers with unreported or underreported digital asset transactions.

Who’s considered a crypto broker under IRS rules?

The IRS defines a digital asset broker as any individual or entity that facilitates buying, selling, or trading digital assets on behalf of customers whose identities are known or verifiable. So if an exchange or other digital asset platform processes crypto trades and can identify its customers, the IRS generally treats it as a broker.

Common broker categories

For tax purposes, brokers typically include:

• Digital asset platforms: This includes centralized exchanges like Coinbase and Kraken, as well as cryptocurrency ATMs.
• Hosted wallet providers: Companies that hold your private keys and custody your digital assets, while also providing swap or exchange features fall into this category. For example, if a wallet app allows you to trade ETH for USD Coin (USDC), the provider must report that activity.
• Payment processors: Services that allow merchants to accept crypto by instantly converting it to fiat currency are treated as brokers.
• Stablecoin issuers: Entities that facilitate redemption of stablecoins for fiat currency or other assets are subject to broker reporting requirements.

Broker exceptions

On the other hand, these categories are generally not treated as brokers:

• Miners and validators: The IRS explicitly excludes individuals or entities that perform validation services, such as mining or staking, to secure a blockchain network.
• Merchants: If a merchant accepts crypto as payment for goods or services and doesn’t provide a trading service, they’re not brokers for tax purposes.
• Hardware and non-swap wallets: If you use a hardware wallet like Ledger or a non-custodial wallet solely for storage, and the wallet doesn’t have an integrated trading or swap feature, its provider isn’t a broker.

What transactions are subject to broker reporting?

Brokers must report any transaction where a user disposes of a crypto asset in exchange for cash, other crypto assets, or other property. This includes:

• Crypto for cash: Selling any digital asset for USD and other fiat currencies.
• Crypto-to-crypto trades: Whether you swap ETH for Solana (SOL) or BTC for a stablecoin, each trade is a taxable event.
• Non-fungible token (NFT) sales: Selling an NFT for either crypto or fiat is considered a disposal.
• Transaction fees: Gas fee and other transaction costs paid in connection with a digital asset disposition may affect your basis or proceeds.

Certain transactions, like airdrops, hard forks, and wrapping/unwrapping tokens, are not currently subject to broker reporting on Form 1099-DA. The IRS still expects you to report any income or gain resulting from these events.

When do the new IRS crypto reporting rules take effect?

The rollout follows a phased timeline so brokers have time to build the necessary reporting infrastructure. It’s also important to distinguish between the tax year (when you make the trades) and the filing year (when you submit your tax return).

Here’s the timeline for these new IRS crypto tax rules:

Maintain detailed records and simplify your taxes with CoinTracker

New rules like Form 1099-DA reporting, wallet-by-wallet accounting, and changing cost basis methods mean careful tracking is vital for compliance with crypto tax laws. You’ll need clear, defensible records for every transaction.

If you only buy and sell on a single exchange and don't use an external wallet, your tax reporting may actually get easier. Starting with assets acquired in 2026, your exchange should report both gross proceeds and cost basis on Form 1099-DA, similar to how a traditional stockbroker reports securities transactions on Form 1099-B.

If you do anything beyond buying and holding digital assets on one platform, however, your 1099-DAs will likely be incomplete and possibly misleading. You’ll need a way to efficiently and accurately track all activity across wallets and platforms, so it’s easier to complete your tax forms and prove your income and capital gains to the IRS.

Tax time is approaching – are you prepared? Let us simplify your crypto tax journey. Create a free CoinTracker account and let our platform handle the complexities.

Disclaimer: This post is informational only and is not intended as tax advice. For tax advice, please consult a tax professional.