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New IRS Reporting Rules Hit Crypto Traders in 2026: What Bitcoin, Ethereum, and XRP Investors Need to Know

MarketDash Editorial Team
8 hours ago
U.S. crypto investors have about two weeks left to make strategic moves before major IRS reporting changes take effect January 1, 2026, fundamentally altering how exchanges track and report cost basis for digital asset transactions.

If you've been trading crypto across multiple platforms, the next two weeks might be your last chance to play by the old rules. Come January 1, 2026, the IRS is flipping the switch on new reporting requirements that could make tax season considerably more complicated for digital asset investors.

What's Actually Changing

Starting in 2026, centralized exchanges will have to follow the same cost-basis reporting rules that traditional stock brokerages have dealt with for years. That means platforms will report both your purchase price and sale price details for every transaction directly to the IRS.

Right now, exchanges only file Form 1099-DA showing gross proceeds from your sales. They don't tell the IRS what you originally paid. You handle that yourself on Form 8949. But once 2026 rolls around, cost basis reporting becomes mandatory, thanks to provisions tucked into the 2021 Infrastructure Bill.

Why This Could Cost You More

Here's where it gets interesting. Let's say you bought one Bitcoin (BTC) at $50,000 on Coinbase and another at $30,000 on Kraken. Later, you sell one Bitcoin on Kraken for $60,000. Under current rules, you could claim the higher $50,000 Coinbase purchase as your cost basis, showing only a $10,000 gain.

But starting in 2026, Kraken will be required to report its own records to the IRS—showing that lower $30,000 purchase price, which creates a $30,000 taxable gain instead. The flexibility to cherry-pick your most favorable cost basis across platforms essentially disappears.

This transition will hit especially hard for investors who trade across multiple centralized and decentralized exchanges, according to reports from Protos. With less than a month before the new system kicks in, it might be worth evaluating whether certain sales should happen under the 2025 framework.

The Final Window

Through December 31, 2025, U.S. taxpayers selling Bitcoin (BTC), Ethereum (ETH), XRP (XRP), stablecoins, or any other digital assets still calculate and report their own cost basis. After that, exchanges take over much of that reporting responsibility, and your tax strategy options narrow considerably.

The clock is ticking for anyone who wants to make moves under the current, more flexible system.

Back to News

New IRS Reporting Rules Hit Crypto Traders in 2026: What Bitcoin, Ethereum, and XRP Investors Need to Know

MarketDash Editorial Team
8 hours ago
U.S. crypto investors have about two weeks left to make strategic moves before major IRS reporting changes take effect January 1, 2026, fundamentally altering how exchanges track and report cost basis for digital asset transactions.

If you've been trading crypto across multiple platforms, the next two weeks might be your last chance to play by the old rules. Come January 1, 2026, the IRS is flipping the switch on new reporting requirements that could make tax season considerably more complicated for digital asset investors.

What's Actually Changing

Starting in 2026, centralized exchanges will have to follow the same cost-basis reporting rules that traditional stock brokerages have dealt with for years. That means platforms will report both your purchase price and sale price details for every transaction directly to the IRS.

Right now, exchanges only file Form 1099-DA showing gross proceeds from your sales. They don't tell the IRS what you originally paid. You handle that yourself on Form 8949. But once 2026 rolls around, cost basis reporting becomes mandatory, thanks to provisions tucked into the 2021 Infrastructure Bill.

Why This Could Cost You More

Here's where it gets interesting. Let's say you bought one Bitcoin (BTC) at $50,000 on Coinbase and another at $30,000 on Kraken. Later, you sell one Bitcoin on Kraken for $60,000. Under current rules, you could claim the higher $50,000 Coinbase purchase as your cost basis, showing only a $10,000 gain.

But starting in 2026, Kraken will be required to report its own records to the IRS—showing that lower $30,000 purchase price, which creates a $30,000 taxable gain instead. The flexibility to cherry-pick your most favorable cost basis across platforms essentially disappears.

This transition will hit especially hard for investors who trade across multiple centralized and decentralized exchanges, according to reports from Protos. With less than a month before the new system kicks in, it might be worth evaluating whether certain sales should happen under the 2025 framework.

The Final Window

Through December 31, 2025, U.S. taxpayers selling Bitcoin (BTC), Ethereum (ETH), XRP (XRP), stablecoins, or any other digital assets still calculate and report their own cost basis. After that, exchanges take over much of that reporting responsibility, and your tax strategy options narrow considerably.

The clock is ticking for anyone who wants to make moves under the current, more flexible system.