by Jake ClaverIf you hold crypto, the reporting environment around your transactions changed meaningfully starting in 2025, and it’s changing again in 2026. Here’s what’s actually different.
Brokers Are Now Reporting to the IRS Directly
Starting with transactions from January 1, 2025, crypto brokers, including exchanges, certain hosted wallet providers, and payment processors, are required to report your sales and exchanges to the IRS on a new form, Form 1099-DA. For 2025, brokers only report gross proceeds, not your cost basis. That creates a real gap: the IRS sees how much you sold for without seeing what you originally paid, which means accounts showing losses or minimal gains on paper are more likely to draw a closer look. Keeping your own detailed, auditable records of cost basis for every lot matters more this year than it has in the past, because you may need to defend those numbers directly.
Cost Basis Reporting Gets Mandatory in 2026
Beginning January 1, 2026, brokers will also be required to report cost basis for covered transactions, and they’ll default to the FIFO method, selling your oldest lots first. In a portfolio that’s appreciated over time, FIFO is typically the least tax-efficient way to calculate gains, since your oldest lots are usually your cheapest. Until the end of 2025, taxpayers still have the flexibility to use other methods, including Highest-In-First-Out, which lets you match sales against your highest-cost lots to minimize taxable gains. If tax-loss harvesting or portfolio rebalancing makes sense for you, this year is the window to do it under the more favorable rules.
The Wash Sale Rule Still Doesn’t Apply, For Now
Because crypto is currently classified as property rather than a security, the IRS wash sale rule doesn’t technically apply to it, which means you can sell a losing position and immediately repurchase the same asset without losing the ability to claim the loss. Lawmakers have proposed closing this gap, so treat it as a rule that could change rather than a permanent feature of crypto taxation.
Global Reporting Is Catching Up Too
Outside the U.S., the OECD’s Crypto-Asset Reporting Framework is bringing automatic information exchange to digital assets internationally, similar to what already happens with traditional bank accounts under the Common Reporting Standard. The practical effect is that offshore crypto holdings are becoming considerably harder to keep invisible from tax authorities.
What to Actually Do About It
None of this means panic; it means documentation. Keep detailed records of every transaction, including DeFi activity, which is where a lot of tracking software and even CPAs tend to make mistakes. If you’re holding meaningful gains and considering entity structures or trusts to manage your tax exposure, this year’s window for flexible cost basis accounting is a real deadline, not a sales pitch. Work with a CPA who specifically handles crypto, since the reporting gap in 2025 is exactly the kind of thing a generalist tax preparer can miss.
Educational only, not tax, legal, or investment advice. Check primary sources and speak with a qualified professional before making financial decisions.
