When it comes to voluntarily paying taxes on time to the IRS, crypto investors may not have a great record. At least, not according to an IRS review from 2023, which showed “the potential for” a mere 25% compliance rate.
Translation: Only about a quarter of crypto investors are likely voluntarily complying with their tax obligations.
But that low rate is likely to rise, because 2025 is the first year that investors with accounts on centralized crypto exchanges are subject to third-party reporting.
If you sold or exchanged crypto this year and conducted those transactions on a centralized exchange such as Coinbase, the exchange is now required to report your sales and exchanges to the IRS on Form 1099-DA (Digital Assets). You’ll get a copy too, and it should be sent to you by January 30, 2026 in time for you to file your 2025 tax return.
To be clear, that reporting does not create any new tax obligations for you. But it will make it easier for the IRS to know if you’re shirking them.
How? If what you report on your return doesn’t match what appears on the 1099-DA form sent to the IRS, its Automated Underreporter system may flag the discrepancy and send you a notice to correct the mismatch, said Shehan Chandrasekera, head of tax strategy at CoinTracker, a provider of crypto tracking technology.
But there is something in it for you, too.
“The 1099, while it increases compliance, also makes life a lot easier for those who need to report on their investments,” said Tomer Siegal, vice president of product at Ledgible, a crypto tax software provider.
What will not be on your 1099-DA
There are, however, some important exceptions of certain crypto transactions that do not have to be reported on the 1099-DA, but which you will still need to report on your 2025 tax return next year.
If you do get a 1099-DA with gross proceeds, given that it’s the inaugural year of the reporting requirement, “check that (your crypto exchange) reported it correctly,” Siegal said.
Stablecoin, NFTs and wrapped tokens: Centralized exchanges issuing 1099-DAs do not have to report any qualified stablecoin sales you made under $10,000, nor any sale of non-fungible tokens (NFTs) below $600, nor transactions involving the transfers of wrapped tokens (which allow for easy use of one form of crypto — eg, bitcoin — on a decentralized platform that is based on another form — eg, Ethereum), Chandrasekera said.
You, however, are still obligated to report them on your tax return.
Crypto ETFs: Siegal noted that if you sold shares in an SEC-regulated bitcoin or ethereum exchange-traded fund this year, those transactions will be subject to third-party reporting. But they will appear on a Form 1099-B – the same form used for any of your sales through a broker involving stocks, bonds or derivatives.
Crypto assets on defi exchanges are not subject to third-party reporting
If you engaged in transactions this year over decentralized exchanges – which allow for peer-to-peer trading of crypto and you, not the platform itself, maintains possession of your holdings – you will not get a 1099-DA from those platforms. What’s more, a requirement that they begin issuing those forms in 2027 was repealed earlier this year.