IRS delays crypto tax reporting rules until 2026, giving brokers and investors more time to prepare for new tax reporting requirements.
The IRS has announced a big delay in the new crypto tax rules, moving the deadline to January 1, 2026. This gives CeFi brokers and cryptocurrency holders extra time to adjust to the changes. Here’s a simple explanation of what this delay means for CeFi investors and what to expect next.
What Prompted the Delay?
The IRS new rules, which were supposed to start in 2025, are meant to make tax reporting for crypto transactions clearer. These rules require brokers to report the cost of crypto assets sold on their platforms. If investors don’t choose an accounting method the transactions will automatically follow the First-In, First-Out (FIFO) method.
Most CeFi brokers are not ready to meet the new rules, especially those that let investors choose which crypto units to sell. Understanding these difficulties, the IRS released Notice 2025-7, which gives temporary relief and delays the rules by one year.
Key Updates for CeFi Investors
Flexible Accounting Methods in 2025
In a major relief for crypto holders using CeFi platforms, the IRS’s temporary relief for 2025 allows investors to:
Use their own records or crypto tax software to document transactions.
Avoid being locked into the FIFO method during this period.
This flexibility can lead to more favorable tax outcomes, especially in a bull market where FIFO could result in higher capital gains.
Automatic Application of Relief
The temporary relief is automatic, so taxpayers don’t need to do anything extra to use it in 2025. However, it is important to keep proper transaction records and ask a tax expert for help if needed.
Compliance Deadline: January 1, 2026
From 2026, crypto investors must choose an accounting method for their assets on CeFi platforms. If they don’t choose, the IRS will use the FIFO method (first in, first out) by default. Brokers are expected to have systems ready for these changes by then.
Revised Tax Forms
The IRS has made a new 1099-DA tax form for crypto transactions. This form keeps privacy by not showing details like wallet addresses and transaction IDs. It follows the rules for reporting normal financial assets and makes it easier to follow the rules.
What This Means for CeFi Investors
The delay gives both brokers and investors important time to get ready for the changes. Here’s what this means:
Time to Plan Taxes:
- Investors can look into different accounting methods to lower their taxes.
- Using good crypto tax software or talking to tax experts can help make reporting easier.
Less Pressure on Brokers:
- CeFi platforms can use this extra time to create better systems for tracking and reporting costs.
- Improved systems will make it easier for both brokers and users to follow the rules.
Benefits of the Transition:
- The extra time in 2025 lets investors make better decisions without worrying about the default FIFO rules.
Expert Advice for CeFi Investors
- Tax experts emphasize the importance of preparation during this transition period. Shehan Chandrasekera, Head of Tax Strategy at CoinTracker, advises:
- Make sure to pick your accounting method at your CeFi exchange on 1/1/26. If you don’t pick one, you will most likely default to FIFO.
Following these guidelines can help CeFi investors avoid unexpected tax burdens and stay compliant with IRS regulations.
IRS Delays Crypto Tax Reporting: Looking Ahead
The IRS has delayed crypto tax reporting rules because regulating the fast-changing cryptocurrency market is complicated. By moving the deadline to 2026, the IRS wants to make the change easier for both brokers and investors.
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When the new rules begin, it will be important for everyone to stay informed and prepared. Choosing an accounting method, keeping accurate records of transactions, or using good crypto tax software will help manage these changes well. For now, CeFi investors should take advantage of the temporary relief in 2025 and start getting ready for the new rules in 2026.
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