Crypto Investors Confront New Tax Regulation Challenges
According to a recent survey by Awaken Tax, more than 50% of US crypto investors are worried about potential penalties under the IRS's 2025 tax reporting requirements. The regulation mandates exchanges like Coinbase to report all digital asset transactions via Form 1099-DA, aiming to combat tax evasion.
Impact of Regulations and Operational Complexities
For the first time, the IRS will gain access to internal exchange data and cross-check it with taxpayer filings. However, the complexity of crypto transactions poses a major challenge. Users frequently move assets between wallets and interact with DeFi platforms, making it difficult for exchanges to provide complete tax data.
Low Compliance and Rising User Responsibility
Andrew Duca, founder of Awaken Tax, pointed out that while the IRS treats crypto assets similarly to stocks, their actual use is far more complex. Exchanges can only report proceeds from sales, not cost basis, requiring taxpayers to fill in the gaps using Form 8949. Current compliance rates remain under 20%.
- Majority of investors fear IRS penalties
- Exchanges required to submit Form 1099-DA
- Taxpayers must report cost basis separately
- Compliance rate currently under 20%