IRS Crypto Reporting Rules Expand Complexity for Investors

The US Internal Revenue Service (IRS) has expanded its crypto reporting rules, pushing investors to maintain accurate transaction records across exchanges, wallets, staking, and decentralized finance (DeFi).

For a long time, many crypto investors treated tax preparation as a simple process of downloading a CSV from an exchange and sending it to tax software. However, this approach becomes unreliable when the portfolio includes self-custody, staking, DeFi, non-fungible tokens (NFTs), or transfers among several exchanges.

The distinction matters more now because broker reporting is expanding. US brokers began reporting gross proceeds from digital asset dispositions on Form 1099-DA for the 2025 tax year. Basis reporting for covered assets starts with 2026 transactions.

A single DeFi interaction can produce multiple events, such as deposits, receipt tokens, reward tokens, fees, and withdrawals. The tax analysis depends on the transaction's substance and available guidance, not just the number of lines in a wallet export.