Do crypto exchanges report to the IRS? A practical guide

Do crypto exchanges report to the IRS? A clear definition and context

When people ask if crypto exchanges report to the IRS they usually mean whether an exchange will send tax information about trades and sales to the government. In plain terms, reporting means a platform furnishes information to the IRS and to a customer on a tax form so the taxpayer can match figures on their return, and it may also mean the exchange keeps records for compliance reasons.

Beginning with the 2025 tax year, many broker-like exchanges that effect sales of digital assets must file and furnish Form 1099-DA to report sales of digital assets, which changes how some transactions are reported by platforms to the IRS About Form 1099-DA (see our crypto coverage).

It helps to separate tax reporting from other federal obligations. Exchanges often collect identity information and keep transaction records for anti-money-laundering and Bank Secrecy Act purposes, and those duties are separate from the tax forms an exchange may send to customers FinCEN guidance on virtual currency rules.

What ‘reporting’ means for taxpayers

For taxpayers, reporting usually appears as a tax form that lists proceeds, dates, and other details that matter for calculating gains or losses. A form makes it easier to reconcile a sale, but taxpayers still must confirm cost basis and other details before filing IRS virtual currencies guidance.

How tax reporting differs from compliance reporting (KYC/AML)

Tax reporting sends numbers to the IRS and gives customers a form to use on their returns. Compliance reporting under FinCEN and the Bank Secrecy Act focuses on who is using the account, and it requires identity checks, recordkeeping, and suspicious activity reporting when warranted FinCEN guidance on virtual currency rules.

How Form 1099-DA changed crypto broker reporting for 2025 and beyond

Form 1099-DA was introduced to create a clearer, more standardized way for brokers to report digital-asset sales starting with tax year 2025, and it affects many exchanges that meet the broker definition About Form 1099-DA. See also Understanding your Form 1099-DA, a Sovos explainer, and a Fidelity guide.

The form is intended to capture sales of digital assets so that taxpayers and the IRS see proceeds and dates in a consistent format. That does not remove taxpayers responsibility to calculate cost basis or report gains and losses correctly on their returns Instructions for Form 1099-DA.

What Form 1099-DA reports

When an exchange issues a 1099-DA it typically lists the sales that the exchange identifies as brokered sales of digital assets. The form focuses on proceeds and transaction dates that feed into a taxpayer’s reconciliation process About Form 1099-DA.

How it replaces or complements older forms

Form 1099-DA is meant to standardize reporting for digital-asset sales, while older forms like 1099-K and 1099-B may still apply in payment-processing or traditional brokerage contexts depending on the platform’s business model IRS virtual currencies guidance.

Which transactions exchanges typically report and which may not

Whether an exchange issues a 1099-DA depends on whether the platform meets the statutory broker definition and whether the activity is a reportable sale, so the same account activity can look different across platforms About Form 1099-DA.

Activities more likely to generate a broker-style form include sales of digital assets for fiat or other transactions the exchange treats as brokered sales. By contrast, internal ledger transfers, custody-only moves, and some peer-to-peer arrangements may not produce a 1099-DA from the platform Deloitte summary on broker reporting (see our guide on exchange programs).

Reporting triggers and thresholds differ by form and by whether the platform is a broker, so not receiving a 1099-DA does not automatically mean you have no taxable events. You remain responsible for reporting gains and losses even when a platform does not issue a form About Form 1099-DA.

Broker definition and reporting triggers

The statutory broker definition and the way an exchange records activity determine reporting. Some exchanges that custody assets and match buyers and sellers will be treated like brokers for reporting purposes, while others may not meet that threshold and will report differently About Form 1099-DA.

Common exceptions: internal ledger moves, custody transfers, peer-to-peer

Examples often left unreported by a platform include moving assets between your own accounts on the same platform, transfers to an external wallet, or peer-to-peer trades that never pass through a brokered sale process on the exchange, though these flows still have tax consequences for the taxpayer in some cases Deloitte summary on broker reporting.

Why older forms 1099-K and 1099-B still matter

Form 1099-K traditionally covers payment-processor type transactions and is sometimes used when an exchange facilitates third-party payments. Form 1099-B has been used for brokerage-style sales, but 1099-DA aims to centralize reporting for digital-asset sales in a single form type IRS virtual currencies guidance.

Because business models differ, some platforms may still send a 1099-K or a 1099-B depending on how they classify activity internally. Check all forms you receive and do not assume one form covers every transaction About Form 1099-DA.

Differences between 1099-K, 1099-B and 1099-DA

Think of 1099-K as capturing certain payment transactions, 1099-B as a brokerage sales form, and 1099-DA as the IRS effort to standardize digital-asset sale reporting when a broker is involved. Each form has different triggers and thresholds that matter for reporting obligations IRS virtual currencies guidance.

When an exchange might still send 1099-K or 1099-B

If an exchange also operates a payments business or retains a traditional brokerage structure for some accounts it may still furnish older forms in certain cases. That is why reviewing every tax document from a platform remains important About Form 1099-DA.

Exchanges’ KYC, AML and BSA obligations – what that means for your account

Beyond tax forms, U.S. exchanges operate under FinCEN rules and the Bank Secrecy Act, which require customer identification, recordkeeping, and suspicious activity reporting as separate federal duties FinCEN guidance on virtual currency rules.

Typical account information collected for KYC includes identity details, contact information, and verification documents. Exchanges keep these records to meet AML obligations and to support investigations or regulators when required FinCEN guidance on virtual currency rules.

Those records can also be relevant if the IRS questions your tax reporting because account identity and transaction history may be used to match on-file activity with returns, so preserving statements and KYC communications can be helpful if you need to respond to notices IRS virtual currencies guidance.

State-level variation: why not every state reports the same way

State tax authorities do not all handle crypto reporting the same way, and information-sharing practices with exchanges vary by jurisdiction, so state reporting can differ significantly from federal reporting patterns Tax Foundation analysis of state approaches.

For taxpayers, this means you should not assume your state will receive the same exchange data as the IRS. If you have large or complex activity, check your state guidance or speak to a preparer who knows local rules FinCEN guidance on virtual currency rules.

Practical steps: how to reconcile exchange statements and report on your return

Start by obtaining a complete transaction export from each exchange and save copies in a secure folder. Many exchanges offer CSV exports that list trades, deposits, withdrawals, and fees, and keeping the raw export helps trace any later questions IRS virtual currencies guidance. See Finance Police for related guides.

Next, reconcile proceeds with your cost basis records. The basic idea is to match each sale or trade listed by an exchange with the original acquisition cost and date to calculate gain or loss for Form 8949 and Schedule D About Form 1099-DA.

Keep KYC and account records. Retain copies of identity verification, account opening communications, and any support correspondence that documents transaction intent or unusual flows; these documents can be useful if the IRS asks for clarification IRS virtual currencies guidance.

Records to collect from exchanges

At a minimum, export transaction history, trade confirmations, deposit and withdrawal logs, and any 1099 variants the exchange furnishes. Save unedited CSVs and keep a clear folder structure by year and platform IRS virtual currencies guidance.

How to report gains and losses on tax forms

Use Form 8949 to list individual sales and trades and Schedule D to summarize totals on your return. Even if you do not receive a 1099-DA, you may need to report gains and losses based on your records IRS virtual currencies guidance.

Edge cases to watch: peer-to-peer trades, wrapped tokens, and cross-exchange settlements

Some transaction flows remain unsettled in practice, such as peer-to-peer trades that never pass through an exchange ledger in the same way as brokered sales, custodial wrapping of tokens, or complex cross-exchange settlements About Form 1099-DA.

Open questions persist about how certain wrapped or custodial arrangements are treated, and guidance and practice may evolve as regulators and tax professionals work through edge cases Deloitte summary on broker reporting.

Document the facts when you use unusual flows. Keep timestamps, transaction IDs, and any messages that show intent or counterparties so you can support your tax position if needed About Form 1099-DA.

If you do not receive a 1099-DA: what to check and do next

An exchange might not send a 1099-DA because it does not meet the broker definition, because the activity was not a reportable sale, or for timing and threshold reasons. Business model differences also matter About Form 1099-DA.

Even without a 1099-DA you should export your transaction history, reconcile cost basis, and report sales on Form 8949 and Schedule D if you have taxable events. The absence of a form does not remove your reporting duties IRS virtual currencies guidance.

Document outreach to the exchange if you ask for a tax form or clarification. Keep copies of support tickets and responses to show you attempted to obtain records if the IRS questions your filing later About Form 1099-DA.

Responding to IRS notices about crypto reporting

If the IRS sends a notice, verify the notice details and gather the exchange statements, KYC records, and your cost basis workpapers before replying. Early organization makes responses clearer and faster IRS virtual currencies guidance.

Basic reply steps include confirming the notice type, assembling documentation, and answering within the deadline. For complex issues, consider a tax professional who understands digital-asset reporting and recent broker-reporting changes About Form 1099-DA.

Common mistakes and how to avoid them

Common errors include relying only on an exchange 1099, failing to reconcile cost basis, and misclassifying transfers as non-taxable. These mistakes can lead to mismatch notices or audits IRS virtual currencies guidance.

Simple checks to reduce errors: confirm dates, match proceeds to your records, and keep an independent transaction ledger. Export raw data from exchanges before making edits to maintain an audit trail Deloitte summary on broker reporting.

Practical examples and scenarios (no tax advice, just illustrate common flows)

Example scenario: selling crypto for fiat on an exchange that acts like a broker typically results in a form showing sales proceeds, which you then reconcile with purchase dates and cost basis before reporting on Form 8949 and Schedule D IRS virtual currencies guidance.

Another scenario: trading crypto-to-crypto on a platform may be tracked differently by an exchange and could trigger reporting depending on how the exchange treats the trade, so keep records of the trade details and the acquisition dates for the assets involved About Form 1099-DA.

Peer-to-peer transfers that never pass through a brokered sale on an exchange often do not generate a 1099 from that platform, but you should still track basis and timestamps because tax consequences can arise when you later dispose of the asset Deloitte summary on broker reporting.

When to consult a tax professional and what to ask

Consider professional help if you have complex custody flows, large volume trading, or you receive an IRS notice that you do not understand. These red flags often make professional review worthwhile Deloitte summary on broker reporting.

Bring the following to a preparer: exchange transaction exports, any 1099 variants, KYC documents, and a simple timeline of unusual transfers. Ask how they treat edge cases and what documentation they recommend keeping About Form 1099-DA.

Short checklist and next steps

Immediate actions: export CSVs from each exchange, save unedited backups, reconcile sales with cost basis, and file gains or losses on Form 8949 and Schedule D as appropriate IRS virtual currencies guidance.

Ongoing habits: keep a dedicated transaction folder, update your ledger after significant moves, and review any tax forms sent by platforms each year. Verify state rules if you have activity that might affect state tax filings Tax Foundation analysis of state approaches.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.