Crypto exchanges tracking IRS gains face mounting tax compliance strain

The United States’ first crypto tax filing season under upgraded broker reporting requirements is bringing a familiar problem into sharp focus: more data for the IRS, but still a heavy lift for taxpayers. Under the newer Form 1099-DA rules applying to 2025 activity, brokers generally report the gross proceeds from certain digital asset sales—information that is new (or at least more visible) for the tax authority—yet cost basis is generally not included, leaving taxpayers to reconstruct their gains and losses from their own records.

That mismatch between what exchanges report and what returns require is showing up in real-world filing experiences. In an August survey of 1,000 US crypto investors conducted by Awaken Tax, 21% of respondents who had filed—or planned to file for an extension—said they were still waiting for information needed from an exchange or platform. A further 20% said their 1099-DA was incomplete or that they were unsure whether it accurately reflected their transactions.

Key takeaways

• For 2025, broker reporting generally covers gross sale proceeds, while cost basis is typically not provided—so taxpayers must compute gains and losses themselves.
• A survey by Awaken Tax found filing friction remains high: 21% of respondents reported waiting on exchange/platform information, and 20% questioned the completeness or accuracy of their 1099-DA.
• Professionals say reconciling 1099-DAs with full trade histories is difficult, especially when activity spans multiple platforms and years.
• Some exchanges have been reported to deliver 1099-DAs late in the filing season or with transaction details that appear inconsistent with customer records.
• Cost basis reporting is slated to expand in 2026 for covered assets, but transfers into broker accounts from outside sources may still create gaps.

More reporting visibility—without the full calculation

To understand why taxpayers still struggle, it helps to look at what 1099-DA is designed to tell the IRS. In a basic example, if an investor buys Bitcoin for $9,000 and sells it for $10,000, the taxable gain is $1,000. But a 2025 1099-DA can show the $10,000 in proceeds without providing the $9,000 cost basis needed to calculate that $1,000 outcome.

The IRS’s approach effectively increases how much sale information the tax authority receives, while taxpayers remain responsible for the arithmetic. That structure can turn record-keeping into a more complex, multi-step process—particularly for anyone who traded frequently, used several platforms, or moved assets between wallets and exchanges during the year.

According to Chris Herbst, managing director at CountDeFi tax reporting, the issue is amplified for active traders. Each sale is counted at full value while the basis-side math still needs to be assembled separately. “For an active trader, that number can be many times their real gain,” Herbst said, summarizing how gross proceeds visibility can mislead the intuitive sense of profit.

Reconciling forms with transaction histories is proving error-prone

While taxpayers are expected to keep their own records, the filing workflow becomes harder when the documents they receive don’t line up cleanly with the trading history they track. Tax professionals interviewed in the reporting describe discrepancies that can make reconciliation a time-consuming (and sometimes confusing) exercise.

Sharon Yip, founder of Crypto Tax Advisors, says her firm has seen differences between the 1099-DAs clients receive and the crypto tax reports her team prepares. In some cases, she says, forms omitted trades. She also points to format differences across exchanges, and notes that some exchanges included cost basis for certain trades but not others—despite basis reporting not being mandatory for 2025.

Yip also highlights a stablecoin-related example: one client conducted more than $300,000 worth of stablecoin trades on an exchange in 2025, yet the exchange’s 1099-DA showed less than $100,000 in total stablecoin proceeds. Even where the underlying activity is recorded correctly somewhere, mismatched reporting can force taxpayers to spend additional time validating what the form actually represents.

Timing has been another friction point. Andrew Duca, founder of Awaken Tax, said the firm has seen customers receiving 1099-DAs relatively late in the filing season. Duca pointed to exchanges such as Kraken as an example, citing an account that Kraken reportedly did not send forms to users until about two weeks before the April 15 tax deadline. He also referenced a Kraken 1099-DA from that period showing no reported transaction information.

Kraken did not respond to the publication’s request for comment.

Why taxpayers still can’t “just copy the numbers”

The core practical takeaway for investors is that 1099-DAs are not meant to replace a taxpayer’s own reporting work. Even when a form is complete, the IRS still expects returns to reflect actual gains and losses. Where cost basis is not included in broker reporting, taxpayers must fill in the missing elements using their records.

Herbst emphasized that what matters is the “full transaction history from the day the account opened,” including trades, fees, deposits, withdrawals, and transaction identifiers such as wallet information. He added that basis generally follows the asset across transfers. That means a missing piece of history can distort gain calculations later—possibly years after a trade occurred—if the asset was moved between platforms in the meantime.

Andrew Duca similarly argued that the updated visibility does not automatically create a finished calculation for taxpayers. As he framed it, “Visibility without basis produces the zero-basis problem.” The issue is straightforward: if a taxpayer relies on a form that shows proceeds but lacks acquisition-cost information, the return may fail to capture the true economic outcome.

Duca’s advice to taxpayers is to compare 1099-DA information against their complete transaction history rather than treating the form as authoritative on gain and loss. In his view, the IRS expects returns to show actual gains and losses—even if an exchange’s reporting may contain errors or omissions.

What changes in 2026—and what may remain unsolved

Looking ahead, broker reporting requirements are expected to expand. From 2026, brokers must generally report cost basis for covered digital assets, which should reduce—but not necessarily eliminate—the “proceeds without basis” problem. That would give taxpayers more of the inputs needed to compute taxable results without manually reconstructing acquisition costs for every covered transaction.

However, the reporting picture is not guaranteed to be seamless. The rules do not necessarily cover every scenario—for example, assets transferred into a broker from another exchange or wallet may fall outside certain requirements. That means gaps can still arise depending on where assets originated and how transactions are structured across custody providers.

In the near term, the broader lesson from the 2025 filing season is that increased IRS visibility doesn’t remove the need for strong internal records. As reporting improves, the key question for taxpayers and tax software providers will be whether transaction history can be reconciled accurately, quickly, and with enough detail to compute real gains and losses—not just gross sales totals.

As the industry transitions into 2026’s cost-basis phase, readers should watch how reliably brokers supply the additional fields and whether late or incomplete forms continue to create mismatches—especially for users who move assets between exchanges, wallets, and brokers.