3 weeks left for crypto investors until IRS changes reporting rules

US crypto investors have just three weeks to complete their sales before historic new IRS changes. Cost-based report It takes effect.

For 2025 transactions, centralized exchanges are not required to include cost basis information on their Form 1099-DA filings. In 2026, this will change.

Until December 31, 2025, the IRS will only require centralized exchanges like Coinbase and Gemini to report digital assets sale using the form. This requirement was first introduced in the Infrastructure Bill of 2021 as a way to improve tax compliance for users of centralized exchanges.

U.S. taxpayers who sell digital assets such as Bitcoin (BTC), Ether (ETH), and even stablecoins such as USDT and USDC are typically required to file Form 8949.

If the dollar value of a virtual currency sale reported on Form 8949 does not match the Form 1099-DA reported by the central exchange to the IRS, the tax authority may send the taxpayer a notice to amend the Form 8949.

CPAs caution that taxpayers considering a sale before or after December 31, 2025 should consider the impact of this Form 1099-DA change.

As always, taxpayers must value accuracy if they want to avoid investigations and audits.

IRS Cost Basis for Multi-Exchange Customers

If someone has activity on multiple centralized exchanges (CEX) or decentralized exchanges, this can be a complex accounting task.

Generally, taxpayers have the right to use first-in, first-out, specific ID, or other taxpayer-specified accounting standards when paying taxes.

Consider someone who buys 1 Bitcoin (BTC) on Coinbase, then buys 1 BTC on Kraken at a lower price, and then sells 1 BTC on Kraken. This taxpayer may be entitled to use the higher priced Coinbase BTC as a cost basis to reduce their capital gains tax payments. However, Kraken will be required to report the lower BTC cost basis to the IRS for all sales starting in 2026.

Investors who want to maintain accuracy and pay the legal minimum must keep records and accurately disclose the cost basis of each acquisition and sale.

Read more: Strategy market cap increases by $8 billion after IRS exemption

Take advantage of the 2025 standards while they’re still available

Simply put, starting in 2026, centralized crypto exchanges will need to be more in line with brokerages regarding IRS reporting requirements.

Similar to brokerage firms that report both the purchase and sale cost basis of their clients’ stock transactions, CEX must also report on a cost basis.

New regulations taking effect within four weeks will require filing of Form 1099-DA. on a cost basis for each sale. Percentage of digital assets held by all US customers. This is a momentous change for those who want to take advantage of the 2025 standard, which does not include automatic cost-based reporting to the IRS.