Crypto Exchange Tax Reporting (1099 Forms) for 2025: What You Need to Know

Starting January 1, 2025, every crypto exchange serving U.S. customers must report your trades to the IRS using a brand-new form: 1099-DA. This isn’t just a paperwork update-it’s a complete overhaul of how cryptocurrency taxes work. If you’ve ever struggled to track gains from multiple exchanges, guessed at your cost basis, or gotten a confusing 1099-B that didn’t match your records, this change is meant to fix that. But it’s not a magic fix. Here’s exactly what you need to do, what exchanges will report, and where the traps still lurk.

What Is the 1099-DA Form?

The IRS created Form 1099-DA to bring cryptocurrency reporting in line with how stocks and bonds have been reported for over a decade. Before 2025, exchanges used different forms-some sent 1099-B, others sent 1099-MISC for staking rewards, and many sent nothing at all. That left taxpayers scrambling to piece together transaction histories from emails, app exports, and spreadsheets. Now, every broker (including Coinbase, Kraken, and Binance.US) must issue a single, standardized form called 1099-DA.

It’s not just about the form number. It’s about consistency. The 1099-DA will include:

• Full date and time of each sale, trade, or exchange
• What digital asset was involved (BTC, ETH, USDC, etc.)
• Gross proceeds from the transaction (how much cash or crypto you received)
• The fair market value of the asset at the time of the trade
• Your broker’s name, address, and EIN

For 2025, you’ll only get gross proceeds. Cost basis-what you originally paid for the asset-won’t be reported until 2026. That means you’ll still need to track your purchase prices yourself for the next tax season.

Who Gets a 1099-DA?

You’ll get a 1099-DA if you traded, sold, or exchanged crypto on any platform classified as a “digital asset broker” by the IRS. That includes:

• Centralized exchanges (Coinbase, Kraken, Binance.US)
• Payment processors like BitPay or CoinGate
• Hosted wallet providers that facilitate trades (like Gemini or BlockFi)

But here’s the catch: if you used a decentralized exchange (DEX) like Uniswap or a peer-to-peer platform like LocalBitcoins, you won’t get a 1099-DA. The IRS defines brokers as entities that act as intermediaries. DEXs don’t hold your funds or execute trades on your behalf-they just provide the software. So if you traded directly from your wallet, that transaction is still taxable, but it won’t show up on any form.

Also, offshore exchanges like Binance.com (not Binance.US) don’t report to the IRS if they don’t serve U.S. customers. That doesn’t mean you’re off the hook. The IRS can still find those transactions through bank records, wallet addresses, or third-party data matching.

What About NFTs?

NFTs are treated differently. You’ll need two separate 1099-DA forms if you sold NFTs in 2025:

• One for the first sale of an NFT (when it’s created and sold by the original creator)
• Another for all other sales (resales on OpenSea, Blur, etc.)

This matters because the first sale is often treated as ordinary income, while resales are capital gains. If you bought an NFT for $500 and sold it for $2,000, you owe tax on the $1,500 gain. But if you minted it yourself and sold it for $2,000, you might owe income tax on the full $2,000. The 1099-DA won’t tell you which category it falls into-you’ll still need to track that yourself.

How Is This Different From Pre-2025 Reporting?

Before 2025, crypto tax reporting was a mess. About 60% of exchanges issued 1099-B forms, but they didn’t always include cost basis. Some sent 1099-MISC for staking rewards. Others sent nothing. A 2024 study found that 42% of crypto taxpayers had mismatched cost basis data between their records and what exchanges reported. One user on Reddit spent 20+ hours reconciling five different exchange reports.

Now, with 1099-DA, you get:

• One format, everywhere
• Standardized dates and values
• Clear identification of the broker

But the big difference? The IRS now has a direct, machine-readable feed of your trades. They’ll cross-check every 1099-DA against your tax return. If you report a $10,000 gain but your exchange says you sold $15,000 worth, you’ll get a notice. The IRS estimates that unreported crypto income totals $50 billion a year-and they’re cracking down.

What You Still Need to Track Yourself

Even with 1099-DA, you’re not off the hook. Here’s what you still need to record:

• Cost basis: What you paid for each coin, including fees. You’ll need this for 2025 taxes because exchanges won’t report it until 2026.
• Non-broker transactions: DEX trades, peer-to-peer sales, gifts, airdrops, and hard forks.
• Staking and mining income: If you earned crypto from staking, mining, or rewards, you need to report it as ordinary income at its fair market value on the day you received it.
• Transfers between wallets: Moving crypto from Coinbase to your Ledger isn’t taxable. But if you move it to a DEX and trade it, that’s a taxable event.

Use the FIFO (first-in, first-out) method if you don’t have full records. The IRS accepts it as the default. But if you want to use specific identification (like selling your oldest, lowest-cost coins first), you must document it clearly.

What Happens If You Don’t Report?

The IRS has tools now that didn’t exist five years ago. They’ve issued John Doe summonses to major exchanges, forcing them to hand over user data. They’re matching 1099-DA data with your tax return using automated systems. If your return doesn’t match, you’ll get a CP2000 notice-basically, a bill for unpaid taxes, penalties, and interest.

One user on the IRS2Go forum lost $1,200 in penalties because Kraken’s cost basis report didn’t match his manual records. He assumed the exchange was right. It wasn’t. He’d bought Bitcoin in 2020, sold part of it in 2023, and forgot to adjust his basis. The exchange used an average cost method. He used FIFO. The IRS sided with the exchange-and he paid the difference.

Don’t assume the 1099-DA is perfect. Double-check it. Compare it to your own records. If something’s wrong, contact your exchange immediately. They can issue a corrected form.

How to Prepare for 2025 Taxes

Here’s your action plan:

1. Download all your trade history from every exchange before January 1, 2026. Keep PDFs or CSVs.
2. Track your cost basis for every coin you bought, including fees. Use a spreadsheet or crypto tax software like Koinly, CoinTracker, or TokenTax.
3. Separate broker vs. non-broker trades. Make two lists: one for 1099-DA transactions, one for everything else.
4. Record all income from staking, lending, or rewards. Note the date and value in USD.
5. Don’t wait until April. Start organizing in January. Tax software can import 1099-DA files automatically once they’re released.

Professional tax help costs $350-$600 for crypto returns, compared to $220-$350 for regular investments. If you used more than two exchanges or earned crypto outside of trading, it’s worth it.

What’s Coming Next?

By 2026, exchanges will report both gross proceeds and cost basis. That’s a huge step forward. By 2027, the IRS plans to integrate crypto transactions directly into Form 1040, so you won’t need to file separate Schedule D forms.

But challenges remain. Tokenized real estate, DeFi lending protocols, and cross-border trades still don’t fit neatly into the 1099-DA model. And with 15-20% of crypto activity happening off centralized platforms, the IRS will keep chasing gaps.

Still, the direction is clear: crypto taxes are now part of the mainstream financial system. The paperwork is getting easier. The penalties are getting steeper. And the IRS isn’t going away.