IRS will require crypto exchanges to report transactions by 2025

Starting in 2025, the Internal Revenue Service (IRS) will mandate that centralised exchanges report cryptocurrency transactions, marking a significant shift in tax compliance for digital assets.

This new requirement introduces the 1099-DA form, which will be issued by brokers like Coinbase and Gemini to report users' purchases and sales.

According to IRS guidelines, these reports will need to be included in tax returns for the 2025 tax year, which are filed in early 2026.

However, brokers will not be required to report the cost basis—the original purchase price of the asset—until the following year.

Jessalyn Dean, vice president of tax information at Ledgible, indicated that this phased approach aims to facilitate a smoother transition for both taxpayers and brokers.

Decentralised exchanges will face different timelines; they must begin reporting gross proceeds from peer-to-peer transactions in 2027 but will not have access to cost-basis information.

The IRS clarified that reporting obligations apply primarily to brokers who take possession of digital assets sold by customers.

In addition, Bitcoin (CRYPTO:BTC) ETF investors will also see third-party reporting this year, as ETF issuers will provide forms detailing taxable events within the fund.

Despite these increased reporting requirements, the IRS noted that no new taxes are being introduced for digital asset investors.

Instead, these measures are intended to enhance compliance and minimise errors in tax filings.

The announcement comes amid renewed optimism surrounding potential regulatory clarity under Donald Trump's upcoming administration.

Trump's return has sparked discussions about establishing a Senate Crypto Subcommittee aimed at promoting blockchain innovation and investor protection.

Anthony Pompliano has emphasised the importance of clear regulations that foster growth while ensuring investor safety.

As the IRS continues to refine its approach to cryptocurrency taxation, industry experts anticipate further changes that could impact broader adoption and regulatory frameworks in the future.