In 2025, cryptocurrency tax reporting will undergo changes: voluntary tax compliance becomes more prominent, and new reporting requirements emerge. According to the IRS’s 2023 review, about a quarter of crypto investors are likely to voluntarily comply with their tax obligations, but this level is expected to rise in light of future requirements.

Ukrainian translation: only about a quarter of crypto investors are likely to voluntarily comply with their tax obligations.

However, 2025 could be a turning point: it is the first year when accredited centralized crypto exchanges are required to file third-party reports.

If during the year you sold or exchanged crypto assets precisely through a centralized exchange, such as Coinbase, the exchange must now report to the IRS on Form 1099-DA (Digital Assets). A copy of the document will be sent to you by January 30, 2026, so you can file your 2025 tax return.

However, it’s important to understand: this reporting does not create new tax obligations, but helps the IRS detect tax evasion more quickly.

How does this work in practice? If the data you reported on your return does not match the information submitted to the IRS via Form 1099-DA, the Automated Underreporter system may notice the discrepancy and send a correction notice, explained Shehan Chandrasekera, head of tax strategy at CoinTracker.

“If what you declared does not match the 1099-DA data, the Automated Underreporter system may flag the discrepancy and send a notice to correct it.”

– Shehan Chandrasekera

But there are also benefits for taxpayers.

“1099, while increasing compliance, also greatly eases the life of those who must report on their investments.”

– Tomer Siegal

There are exemptions from the mandatory 1099-DA reporting for certain crypto operations that still need to be reported on the 2025 tax return.

Cost basis: in 2025 centralized exchanges will report only gross sales amounts on Form 1099-DA, but the cost basis does not appear. The cost basis itself is needed to determine your capital gains and losses.

Starting in 2026, exchanges will also need to report cost basis. But this will apply to securities purchased after January 1, 2025, and provided that the purchase and subsequent sale occurred on the same exchange, the asset remained on the exchange the entire time, and transfers were not permitted. “No transfers are allowed.”

If you received a 1099-DA with gross income, it’s worth checking whether your crypto exchange reported it correctly.

Stablecoins, NFTs, and wrapped tokens: exchanges issuing 1099-DA are not required to report sales of stablecoins below $10,000, NFT sales below $600, or operations with wrapped tokens. However, these assets still need to be reported on your tax return.

You are responsible for reporting them on your return.

Crypto ETF: Siegal noted that if this year you sold shares of an SEC-regulated ETF based on Bitcoin or Ether, those transactions would be subject to third-party reporting. They will appear on Form 1099-B – the same form used for broker-reported sales of stocks, bonds or derivatives.

If you conducted trades on decentralized exchanges (DEX) where you traded cryptocurrencies directly and you held the assets, not the platform, you will not receive a 1099-DA from such platforms. Moreover, the requirement to implement such forms in 2027 was scrapped earlier this year.

Nevertheless, you are still required to declare your taxable DeFi transactions on your tax return.

How to account for gains and losses

Despite the differing reporting requirements for on-exchange assets and off-exchange assets, the taxation of capital gains and losses remains the same.

Your losses can offset your gains. If losses exceed gains, they can be used to reduce ordinary income by up to $3,000 per year. Other losses can be carried forward to future years to reduce taxes on future gains.

For example: in 2025, there were $15,000 in losses from asset sales and $8,000 in gains. You can use $8,000 of losses to offset the tax on gains, and another $3,000 to reduce ordinary income for 2025. There will be $4,000 of losses remaining that can be used in future tax years.

It’s also important to note that, per Chandrasekera, losses from one asset class can be used to offset losses in another class (for example, from stocks to crypto).