Crypto tax reporting in the US is becoming more demanding as IRS broker reporting expands and investor activity spreads across exchanges, self-custody wallets, staking, DeFi and NFTs. The central issue is no longer simply exporting a file from one trading platform at year-end, but reconstructing a complete transaction history that can support gains, losses and income across multiple locations.

Broker forms cover only part of the picture

US brokers began reporting gross proceeds from digital asset dispositions on Form 1099-DA for the 2025 tax year. Reporting of cost basis for covered assets is set to begin with 2026 transactions. That gives the IRS more direct visibility into crypto sales, but it does not mean broker reports will show an investor’s full history.

An exchange can usually track purchases and sales that both happened on its own platform. It often cannot determine what happened before assets arrived from another exchange, a hardware wallet or a decentralized application. If an investor bought ETH on one exchange, moved it to a wallet, staked part of it, used the rest in a liquidity pool, and later sent tokens to a different exchange to sell, the final exchange may see only the deposit and sale. It may not have the original acquisition date, cost basis, staking history or details of the DeFi activity in between.

That missing information can affect more than one line on a return. It may change cost basis, holding period, income recognition, transaction classification and the final amount of gain or loss.

DeFi and staking records are not automatically tax-ready

Public blockchain data does not solve the reporting problem by itself. Block explorers can show contract calls, token transfers and transaction hashes, but they do not explain the investor’s intent or assign tax treatment to each event.

A single DeFi transaction may involve deposits, receipt tokens, rewards, fees and later withdrawals. Some of those movements may reflect a transfer of ownership, while others may only change how an asset is held. According to the source article, the tax treatment depends on the substance of the transaction and available guidance, not simply on what appears in a wallet export.

Staking introduces another layer. The article points to IRS Revenue Ruling 2023-14, which generally treats staking rewards as income when a cash-method taxpayer has dominion and control over them. The fair market value at receipt can also become the basis for a later sale. If that value is not recorded, later gain calculations may be wrong even if sale proceeds are correctly reported.

Wallet-by-wallet basis tracking raises the stakes

The source article says the final digital asset basis regulations moved taxpayers toward wallet-by-wallet or account-by-account identification beginning in 2025. It also notes that Revenue Procedure 2024-28 created a safe harbor for assigning previously unattached basis to wallets or accounts as of Jan. 1, 2025, subject to its conditions.

This means investors cannot assume that one portfolio-wide pool of basis will always produce the right answer across every account. Records now need to show which specific units and basis lots sit in each wallet or account, and that history must follow the assets when they move.

Transfers between wallets owned by the same taxpayer generally are not sales, but they can still create recordkeeping problems if the receiving platform does not inherit the acquisition history. Even crypto paid as a network fee may create a small disposition that has to be considered.

Mismatches are becoming easier to spot

For 2025, Form 1099-DA generally reports gross proceeds rather than profit. Gross proceeds can be much larger than actual economic gain because taxable results depend on proceeds minus supported basis. Starting in 2026, brokers are expected to report basis for certain covered assets, generally those acquired after 2025 in a custodial account with the broker and held there until sale. Assets transferred in from elsewhere are generally noncovered, so proceeds may still be reported without basis.

The result, according to the article, is a likely mismatch problem. The IRS may have the sale amount from a broker, while the taxpayer must supply the purchase history and reconcile the two. If basis is missing and treated as zero, gains can be overstated. If sale proceeds are omitted because a wallet export was incomplete, a filed return may not line up with broker reporting.

The source article argues that the most useful work happens before a return is prepared: gathering exchange files, wallet addresses and income records, pairing transfers so they are not mistaken for sales, removing duplicates and tracing missing basis back to original acquisitions. It says expanding reporting rules do not make every broker form complete, but they do make inconsistencies easier to detect, especially for investors operating beyond a single exchange.

Source: crypto.news