Starting in 2026, US-based cryptocurrency exchanges, such as Coinbase Global Inc. and Kraken, would have to report detailed information on their customers’ transactions to the IRS, according to a new Treasury proposal. This measure was enacted in 2021 to curb crypto-related tax evasion, and the Joint Committee on Taxation estimated at the time that it would raise up to $28 billion in additional revenue over 10 years.
The IRS notes that the tax gap—the difference between taxes owed and collected—is more than $500 billion per year, and that unpaid digital-asset taxes have contributed to this. The proposed regulations would therefore help “crack down on tax cheats while helping law-abiding taxpayers know how much they owe on the sale or exchange of digital assets,” according to the Treasury Department.
Crypto brokers—which include digital-asset trading platforms, payment processors, and certain hosted wallets—would have to track and report key information, such as customers’ capital gains and losses, similar to existing requirements for stock and bond brokers. Reporting requirements would also extend to real estate brokers in cases where digital assets are used to purchase property.
The regulations would apply to both centralized and decentralized exchanges, and would take effect starting in 2026. Brokers would have to report gross proceeds for sales of digital assets on or after Jan. 1, 2025, and adjusted basis reporting—incorporating how much a customer paid for the assets—would kick in the following year for sales on or after Jan. 1, 2026.
The reporting requirements would apply to all types of digital assets, including nonfungible tokens (NFTs). The IRS is creating Form 1099-DA for brokers to send to taxpayers to determine what they owe.
The latest attempt by the US government to rein in the digital-asset market follows the collapse of crypto exchange FTX and other high-profile firms in the industry last year, as well as the Biden Administration’s ongoing attack on the crypto ecosystem. Companies that validate crypto transactions through mining or staking are exempt from the reporting requirements.
Comments are due by Oct. 30, and the government will hold a hearing on the proposal on Nov. 7 if the public requests it. The Blockchain Association looks forward to weighing in on the regulations, noting that if done correctly, the rules could help provide everyday crypto users with the necessary information to accurately comply with tax laws.
