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coinpedia 2025-01-16 14:54:43

Crypto Transactions to Be Subject to Third-Party Reporting Starting in 2025

The post Crypto Transactions to Be Subject to Third-Party Reporting Starting in 2025 appeared first on Coinpedia Fintech News In a latest development, according to CNN , starting in 2025, crypto transactions will be subject to third-party reporting requirements, meaning information about these transactions will be sent to the IRS. This applies to transactions conducted on centralized platforms like Coinbase or Gemini that hold custody of the assets. Notably, the responsibility to report falls on brokers, including custodial trading platforms, digital wallet providers, crypto kiosks, and certain payment processors, as outlined by the IRS. This marks the first tax year where crypto activity will be directly reported to the IRS. In 2025, brokers will track crypto purchases and sales throughout the year and report them on a new form, the 1099-DA. This form will be sent to both the taxpayer and the IRS in early 2026. The information on the 1099-DA must be included in the taxpayer’s 2025 income tax return. If it is not included, the IRS will use the data it has to assess the taxpayer’s tax obligation. Defi Platform However, for individuals who trade crypto on decentralized platforms like Uniswap or Sushiswap, which do not hold their assets, third-party reporting will not begin until 2027. These platforms will report the gross proceeds from transactions but will not provide cost basis information, as they do not have access to the original purchase price of the digital assets. Bitcoin ETFs If you own a spot Bitcoin ETF, third-party reporting will apply this year. The ETF provider will issue either a 1099-B or a 1099-DA. This reporting will cover not only proceeds from the sale of ETF shares but also any activities within the fund that create taxable events, similar to other commodity ETFs. Since the ETF may need to sell some assets each year to cover expenses, there could be gains or losses that investors will need to calculate. It is recommended that Bitcoin ETF holders consult a tax adviser for guidance on this matter.

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