IRS Delays Crypto Tax Reporting Requirements Until 2026

The U.S. Internal Revenue Service announced Wednesday that it will postpone new tax reporting requirements for cryptocurrencies until the start of 2026. The delay will allow brokers to adapt to the new regulations on determining the cost basis for cryptocurrencies on centralized platforms. In July, the IRS and Treasury Department finalized and published new rules for determining which cryptocy units are sold when investors hold multiple units in a brokerage account, such as a centralized exchange. 

Under these rules, if a taxpayer has not identified a preferred accounting method, the First-In, First-Out (FIFO) method will be applied, treating the earliest acquired crypto assets as sold first. The mandate was set to go into effect on Jan. 1, 2025, and now it’s postponed by one year. “Now, there was a practical problem with this approach,” CoinTracker Head of Tax Shehan Chandrasekera wrote on X. The tax expert explained that almost all centralized finance (CeFi) brokers were not prepared to support the specific identification method that allows users to choose which cryptocy units they are disposing of.

This would have left crypto investors with no option but to sell assets under FIFO from the start of 2025, which Chandrasekera said could have been “disastrous” in the current bull market environment. “You’d be unintentionally selling the earliest purchased asset (which tends to have the lowest cost basis) first while unknowingly maximizing your capital gains,” the tax expert wrote.