Starting in 2026, crypto platforms will have to report their transactions to the Internal Revenue Service. However, decentralized platforms that do not hold assets themselves are exempt.
Those are the key takeaways new regulations that the IRS and the U.S. Treasury Department finalized on Friday, effectively implementing a provision of the Biden administration's Infrastructure Investment and Jobs Act, which passed in 2021.
Profits from the sale of crypto and other digital assets are taxable even without these new regulations. However, there has been no real standardization on how those profits are reported to individual investors and to the government. Starting in 2026 (covering transactions in 2025), crypto platforms will be required to provide a standard 1099 form, similar to those sent by banks and traditional brokers.
The IRS not only wants to make it easier to pay taxes on crypto, but also wants to tackle tax evasion.
“We must ensure that digital assets are not used to hide taxable income, and these final regulations will improve detection of non-compliance in the high-risk digital asset space,” IRS Commissioner Danny Werfel said in a statement.
But again, these rules apply to “custodial” platforms (like Coinbase) that actually take possession of customer assets. After lobbying from the crypto industry, decentralized brokers that do not take possession are exempt from these rules.
In fact, the Blockchain Association (an industry lobby group) called the exclusion “a testament to the incredibly powerful voice of our industry and community.”
The Treasury Department and the IRS have indicated that they will include these decentralized brokers in a separate set of rules.
