MAJOR CRYPTO TAX CHANGES

The cryptocurrency tax landscape has undergone dramatic changes in 2025, creating both new compliance requirements and planning opportunities for digital asset investors.

New Broker Reporting Requirements

Cryptocurrency exchanges and certain DeFi platforms now must issue Form 1099-DA, reporting digital asset transactions to both taxpayers and the IRS. This mirrors traditional broker reporting for stocks and substantially increases IRS visibility into crypto transactions.

Cost Basis Tracking Rules

New regulations require specific identification of cost basis for digital asset sales. If you don't specifically identify which tokens you're selling, FIFO (First-In, First-Out) accounting applies by default—which often results in higher gains during rising markets.

Proper wallet tracking and documentation are now essential. You must be able to identify the specific lot sold at the time of the transaction, not retroactively.

DeFi and Staking Income

Staking rewards, liquidity mining income, and other DeFi yields are taxable as ordinary income when received. The fair market value at receipt becomes your cost basis for calculating gain or loss upon eventual sale.

The IRS has clarified that simply receiving staking rewards constitutes a taxable event, regardless of whether you sell or convert the tokens.

NFT Tax Treatment

NFTs may be classified as collectibles, potentially subject to the higher 28% maximum capital gains rate rather than the standard 20% long-term rate. Proper classification depends on the underlying asset and intended use.

Planning Strategies

Tax-Loss Harvesting: Crypto wash sale rules differ from securities—confirm current status with your CPA before harvesting losses.

Long-Term Holding: Holding crypto for over one year still provides preferential long-term capital gains rates.

Charitable Giving: Donating appreciated cryptocurrency avoids capital gains while providing a fair market value deduction.

Qualified Opportunity Zones: Some crypto gains may be eligible for QOZ deferral, though careful structuring is required.