In recent years, the IRS has started paying much closer attention to cryptocurrency. If you’ve filed a U.S. tax return, you may have seen a question about “virtual currency” near the top of your form. That’s because, for U.S. taxpayers, income or capital gains from crypto have always needed to be reported.
What’s changing now is not that you report crypto, but how your crypto activity is reported to the IRS, especially by crypto brokers and trading platforms.
Before we start, a quick reminder: this article is for general information only and is not tax or legal advice. You should speak to a qualified tax professional about your specific situation.
How Are Crypto Tax Rules Changing?
From 2025 onward, the IRS is rolling out new reporting standards for “digital assets” such as cryptocurrency. Until now, detailed sales reporting (using forms like 1099‑B) has mostly applied to traditional investments like stocks and bonds.
Under the new rules, similar reporting will also apply to crypto brokers. In practice, this means brokers will send both you and the IRS new tax forms that summarise your crypto sales and, over time, the cost of acquiring those assets.
The goal is to make it easier for taxpayers to work out their gains or losses and to improve overall tax compliance in the digital asset space.
1. New Reporting for Crypto Brokers
From January 1, 2025: Reporting Your Gross Proceeds
Beginning January 1, 2025, crypto brokers will be required to report the gross proceeds from your crypto sales and exchanges on a new tax form called Form 1099‑DA.
Gross proceeds are the total amount you receive when you sell or exchange a digital asset, before subtracting what you paid for it or any fees.
For example, if you sell Bitcoin for USD 1,000, your gross proceeds are USD 1,000. Even if you originally bought it for USD 900 or paid a fee on the sale.
Form 1099‑DA will provide a record of those proceeds, which you then use, together with your own records, to calculate any taxable gains or losses.
From January 1, 2026: Adding Cost Basis Reporting
From January 1, 2026, brokers are required to go a step further and start reporting cost basis information on Form 1099‑DA as well.
Cost basis is generally the original value of your digital asset when you acquired it, plus certain associated costs like transaction fees.
For example, if you purchased 1 ETH for USD 1,500 and paid a USD 50 fee, your cost basis would be USD 1,550.
If you later sell that 1 ETH for USD 2,000, your taxable gain would typically be USD 450 (USD 2,000 gross proceeds minus USD 1,550 cost basis).
When both gross proceeds and cost basis are reported, it becomes much clearer how your gains and losses are calculated.
It’s important to note that these reporting rules apply to brokers that take custody of digital assets. The new regulations do not currently apply to decentralised or non‑custodial exchanges that never hold your assets.
2. What Will You Receive From Caleb & Brown?
If you’ve used traditional investment platforms before, you might be familiar with tax forms like Form 1099‑B. The new Form 1099‑DA is designed to play a similar role for digital assets.
Here’s what you can expect:
From the 2025 tax year, brokers will send you a 1099‑DA showing the gross proceeds from your digital asset sales and exchanges.
From the 2026 tax year and onwards, that same form will also show cost basis information where available.
You’ll receive a copy of this form to help you prepare your tax return, and the IRS will receive a copy as well.
For the 2025 tax year, the IRS is allowing taxpayers to continue relying on their own records to calculate cost basis. From 2026 onward, it becomes more important to keep your transaction records accurate and to provide clear lot selection instructions (for example, telling your broker which specific units you are selling) so that reported cost basis matches your tax position.
NB: Caleb & Brown are working on a suite of features within the Portal to make your nominating of HIFO, LIFO, as well as cost basis reporting for tax year 2026 effortless.
3. Tax Certification Forms and Backup Withholding
In addition to new reporting forms, you may also be asked to complete standard tax certification forms so your broker can report your transactions correctly to the IRS.
Typically, this will involve one of two forms:
Form W‑9 for U.S. taxpayers.
Form W‑8 for non‑U.S. taxpayers.
These forms confirm basic details about your tax status and help determine how your crypto activity should be reported.
If you do not provide the appropriate tax certification, your future crypto sales or exchanges could be subject to backup withholding from January 1, 2027. Backup withholding means a portion of your proceeds is withheld and sent directly to the IRS.
Keeping your tax forms up to date helps you avoid unexpected withholding and ensures your broker can report your activity correctly.
What Does This Mean for You?
For many crypto users, the core tax rules, such as reporting capital gains or income from crypto, have not changed. What is changing is the level of detail and standardisation in the reports that brokers send you and the IRS.
In practical terms, these changes mean:
You will receive more structured information about your crypto activity each year.
It should become easier to accurately calculate gains and losses if your records are complete.
The IRS will have clearer visibility over digital asset transactions, which makes accurate reporting more important than ever.
If you’re unsure how these new rules apply to your personal situation, consider speaking with a qualified tax professional. They can help you understand how Form 1099‑DA and backup withholding might affect your tax return and what records you should keep.
Conclusion
The new U.S. crypto tax rules focus on improving transparency and consistency in how digital asset transactions are reported. Starting in 2025, brokers will report your gross proceeds on Form 1099‑DA, and from 2026 they will also report cost basis, helping simplify the process of calculating gains and losses.
By staying informed, keeping good records, and making sure your tax certification forms (such as W‑9 or W‑8) are up to date, you can be better prepared for these changes and reduce the likelihood of surprises at tax time.
This information is general in nature and does not take into account your personal circumstances. You should always consult a tax professional to understand how these rules apply to you.