The IRS granted temporary relief for cryptocurrency holders concerning upcoming tax reporting rules.
Extension of Tax Reporting Deadlines
The IRS crypto tax rule, as outlined in Notice 2025-07, provides taxpayers on CeFi exchanges an extra year to utilize various methods of calculating gains and losses from digital asset transactions. Previously, the IRS required a wallet-by-wallet approach for determining cost-basis starting January 1, 2025. Under the new guidance, taxpayers can continue to use their records or tax software to identify specific units sold or transferred. IRS crypto tax regulations will remain in place throughout 2025, giving brokers and taxpayers additional time to adapt to forthcoming requirements.
Clarification on Broker Obligations
Concerns were raised that many CeFi brokers were unprepared to support Specific Identification by the original 2025 deadline. Tax experts said defaulting to FIFO could lead to higher tax liabilities when assets are sold. The reprieve only extends to CeFi transactions occurring between Jan. 1 and Dec. 31, 2025. Starting in 2026, taxpayers will need to affirmatively choose an accounting method through their broker.
Conclusion on New DeFi Rules
The U.S. Department of the Treasury and IRS finalized rules concerning DeFi broker reporting requirements, requiring brokers to report gross proceeds of digital asset sales via Form 1099. This does not impose added tax obligations for holders.
These tax rule changes provide brokers and taxpayers with additional time to adjust to new requirements, creating a more flexible tax reporting system for digital assets.
