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Coin Telegraph
3w
22
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IRS crypto broker rules, explained: What you need to know in 2025
- The IRS defines a crypto broker as any individual or entity that facilitates digital asset transfers, subject to Form 1099-DA reporting requirements.
- The rules stem from the Infrastructure Investment and Jobs Act, expanding broker reporting obligations to decentralized finance (DeFi) and aiming to generate revenue.
- Entities classified as brokers include exchanges, hosted wallet providers, digital asset kiosks, crypto payment processors, and DeFi front-end providers.
- Unhosted wallet providers are generally exempt unless they function like exchanges.
- Efforts to repeal the IRS DeFi broker rules intensified in March 2025 with bipartisan support in Congress and potential implications on DeFi reporting.
- Form 1099-DA, introduced by the IRS, standardizes reporting of digital asset transactions, requiring specific details for accurate tax reporting.
- Brokers must report customers' information, transaction details, digital asset types, gross proceeds, and comply with key dates for reporting.
- Form 1099-DA transitions reporting for tokenized securities, introduces customer-provided acquisition information, and includes new reporting standards for stablecoins and NFTs.
- The IRS crypto broker rules shift tax reporting, necessitating cost basis tracking per account, specific identification for transactions, and adherence to penalties for noncompliance.
- The regulations affect non-domiciled taxpayers as well, emphasizing the importance of precise record-keeping and compliance efforts globally.
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