Analysis: The "watershed" in cryptocurrency taxation is approaching, and the 2026 tax season may become a minefield

December 31, 2025, as 2026 approaches, US crypto investors will face a completely different tax reporting environment than before. Several new regulations will come into effect during the 2025 trading year and be enforced in the 2026 tax season, known in the industry as the “watershed moment” for crypto taxation. One of the core changes is Form 1099-DA. Starting in 2025, US centralized exchanges and other “brokers” will be required to report users’ crypto asset sales and dispositions to the IRS, and will send out the 1099-DA form for the first time in 2026. Initially, most forms will only include the gross proceeds from sales, without the cost basis. If taxpayers fail to clearly report this information themselves, the IRS may default the cost basis to zero and automatically issue tax notices. Meanwhile, “cost basis calculation per wallet” will replace the previously common “unified fund pool” method. The IRS requires each trading platform account or wallet to track costs separately, and sales can only be matched to the asset batches within that wallet. This change is particularly significant for multi-exchange, DeFi, and self-custody users. Industry tax experts point out that reconstructing historical ledgers and organizing all on-chain and off-chain transaction records will be a one-time but extremely tedious task. Although the IRS provides transitional safe harbors in the 2024-28 programs, the compliance window is short, and few investors will fully complete this process. Tax professionals warn that without early preparation, the 2026 tax season could “auto-trigger” penalties due to data mismatches. Under a more data-driven and stricter IRS regulation environment, proactive record-keeping, early planning, and collaborating with tax professionals familiar with crypto assets are becoming essential “must-do” courses for crypto investors.