Headline: The crypto tax reckoning has arrived — and compliance is about to get a lot harder If you thought crypto taxes were optional, think again. For years the IRS has treated cryptocurrency as property — meaning every sale, swap or trade can trigger a taxable event — yet enforcement and compliance remained weak. That gap between what authorities expect and what users report is now closing fast. How we got here The crackdown has been building for years. In 2021 the IRS opened Operation Hidden Treasure to hunt deliberate concealment of crypto income. By 2022 it had hired agents with blockchain expertise and won court orders forcing major exchanges, including Coinbase, to hand over customer data. The message was clear: lax enforcement was ending. What’s new in 2026 This year marks a major escalation. Forty-eight countries — including the U.S., U.K., EU members and Brazil — have agreed to implement the OECD’s Crypto-Asset Reporting Framework (CARF). Under CARF, crypto-asset service providers must report user transaction data to tax authorities, creating cross-border visibility previously unavailable. The U.K. is already pushing: HMRC sent 650,000 “nudge” letters to crypto investors who reportedly owed tax — a 134% jump from last year. And the U.S. has introduced a concrete reporting tool that will transform enforcement. Meet Form 1099-DA For the first time, U.S. cryptocurrency brokers/exchanges began issuing Form 1099-DA — a report that lists cost basis and proceeds for crypto sales and exchanges — to taxpayers and the IRS. Brokers had to issue these forms by February 17, 2026, covering sales and exchanges that occurred in 2025. Going forward (from the 2026 tax year), brokers will also report cost basis routinely. Why this matters That’s a major shift: crypto tax compliance is moving from self-reporting to automatic third-party reporting. With broker reports flowing to the IRS, authorities can directly reconcile exchange-provided data with individual returns, making errors and under-reporting far easier to detect. Where the rules fall short The new reporting regime treats crypto a lot like stocks — but crypto use is not the same as stock trading. Many users: - Move assets between self-custody wallets - Bridge tokens across chains - Interact with DeFi protocols (swaps, liquidity provision, yield strategies) - Stake tokens or use complex on-chain strategies - Trade outside centralized exchanges Those on-chain activities often fall outside traditional broker reporting, creating a major compliance gap for people who use crypto “the way it was designed.” That gap also creates perverse incentives: if DeFi or self-custody becomes a paperwork nightmare, users may be pushed back toward centralized exchanges — the very systems crypto sought to replace. Practical advice for investors If you haven’t been filing crypto taxes, now is the time to act. Enforcement is ramping up and backlogs can be painful to resolve. Steps to take immediately: - Pull and archive transaction histories regularly — many platforms purge old data. - Collect records for all buys, sells, swaps, transfers, airdrops and staking rewards across wallets and exchanges. - Reconstruct cost basis and transaction chains where possible; without records, proving losses or bases is difficult. - Consider dedicated crypto tax software and/or a tax professional experienced with crypto. - File or amend prior-year returns sooner rather than later if you have unreported activity. What the industry needs to do Regulators have closed in; the industry must respond. That means building tax tools that can handle cross-chain complexity, better custodial reporting for on-chain activity, and clearer guidance for users. Making compliance easier will help the sector thrive rather than shrink back into centralized silos. Bottom line The era of crypto tax ambiguity is ending. Global reporting frameworks and new forms like the 1099-DA give authorities the data they need to enforce compliance. For investors, the choice is clear: get your records in order and file accurately, or face greater scrutiny and potential penalties. For the industry, the challenge is to build practical, user-friendly solutions that bridge crypto’s technical reality with tax rules — fast. Read more AI-generated news on: undefined/news

#BTC