US crypto investors have just three weeks to finalize any sales before historic new IRS changes to cost basis reporting come into effect.
For 2025 transactions, centralized exchanges aren’t required to include cost basis information in their Form 1099-DA filings. In 2026, this changes.
Through December 31, 2025, the IRS merely requires centralized exchanges like Coinbase and Gemini to report digital asset sales using the form. This requirement first appeared in the 2021 Infrastructure Bill as a way to improve tax compliance among users of centralized exchanges.
Any US taxpayer who sells digital assets like bitcoin (BTC), ether (ETH), or even stablecoins like USDT and USDC generally has to file Form 8949.
If the dollar value of crypto sales on their Form 8949 doesn’t match the Form 1099-DA that the centralized exchange reported to the IRS, the tax authority might send a notice to the taxpayer requiring them to correct their Form 8949.
CPAs warn that taxpayers should consider the impact of this Form 1099-DA change if they’re considering selling before or after December 31, 2025.
As always, taxpayers should focus on accuracy if they want to avoid inquiries or audits.
IRS cost basis for customers of multiple exchanges
If someone has activity on multiple centralized exchanges (CEXs) or decentralized exchanges, this could become a complex accounting task.
Generally speaking, taxpayers have the right to use first in first out, specific ID, or other taxpayer-specified accounting standards when paying taxes.
Consider someone who bought one bitcoin (BTC) on Coinbase, then one BTC on Kraken at a lower price, then sold one BTC on Kraken. This taxpayer might have the right to use their higher-priced Coinbase BTC as the cost basis to pay less capital gains tax — even though Kraken, for all sales in 2026 and onward, must report the lower-priced BTC cost basis to the IRS.
For investors looking to stay accurate and pay the legal minimums, they must keep records and accurately disclose the cost basis of each acquisition and sale.
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Take advantage of 2025 norms while still available
Put simply, starting in 2026, centralized crypto exchanges will have to fall more in line with stockbrokers when it comes to IRS reporting requirements.
Like stockbrokers who report both the cost basis of the purchase and sale of their customers’ stock trades, CEXs will also have to report cost basis.
New regulations coming into effect in less than four weeks require them to file Forms 1099-DA forms with the cost basis for each sale of digital assets by all US customers. This is a time-sensitive change to consider for anyone who wants to take advantage of 2025 norms, which don’t include automatic cost basis reporting to the IRS.
