2 Cryptocurrency Tax Rule Changes Going Into Effect in 2026

Filing taxes can be confusing for cryptocurrency investors. In the earliest days, crypto trades weren't taxed or regulated. But in March 2014, the IRS issued Notice 2014-21, officially classifying all cryptocurrencies as property rather than currency. That meant selling cryptocurrencies for dollars, trading one crypto for another, or buying goods and services with crypto were all taxable events.

In 2019, the IRS tightened up its enforcement of those rules by adding a crypto question to Form 1040 and aggressively auditing crypto holders. The top exchanges also started issuing 1099 forms to comply with those rules. As we head into the 2026 tax filing season, investors should be aware of two other significant changes.

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1. Form 1099-DA

Starting in the 2025 tax year, all crypto brokers -- including centralized exchanges like Coinbase (NASDAQ: COIN) and specific decentralized platforms -- must issue a new form, 1099-DA, to their users to record their cost basis, sales, trades, and disposals of digital assets.

The dates and cost basis for those trades will serve as a baseline for capital gains tax calculations. That change will standardize all crypto trades in the same manner as stock trades, but it could diminish the appeal of cryptocurrencies among casual or tax-arbitrage traders. Yet at the same time, that clarity might make cryptocurrencies more appealing for conservative retail or institutional investors.

2. Per-Wallet/Exchange Cost Basis Reporting

The second change is a new requirement to track and report the cost basis for all crypto assets held separately across different wallets and exchanges. For example, if you bought Bitcoin (CRYPTO: BTC) on both Coinbase and Robinhood (NASDAQ: HOOD), you'll need to report the cost basis specific to each exchange separately. The 1099-DA forms will simplify that process, but it's more complicated than the previous method of lumping together all holdings of a single token across multiple platforms as a single asset.

What does this mean for crypto investors?

These tighter IRS rules might be frustrating for crypto investors, but they also imply that cryptocurrencies aren't fads that will fizzle out within the next few years. Investors who want some exposure to the cryptocurrency market but don't want to deal with these exchange- and wallet-specific rules should consider investing in the growing list of exchange-traded funds (ETFs) for the market's top cryptocurrencies. Those ETFs can be easily traded like stocks, and their gains and losses are reported in the same manner.

Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool recommends Coinbase Global. The Motley Fool has a disclosure policy.