Catenaa, Saturday, January 11, 2025 – The US Internal Revenue Service (IRS) has announced a temporary measure aimed at easing tax reporting for cryptocurrency holders utilizing centralized finance (CeFi) brokers, as per its latest notice, 2025-7.
The relief comes ahead of the implementation of Section 6045 broker regulations on January 1, 2025. These rules mandate CeFi brokers to report cryptocurrency transactions and implement specific accounting methods for asset sales.
Without proactive selection by users, brokers will default to the First In, First Out (FIFO) method, which can increase tax liabilities.
Recognizing broker readiness issues, the IRS will allow taxpayers to bypass FIFO by using personal records or crypto tax software to specify asset sales during 2025. This ensures greater flexibility for investors navigating the new requirements.
Tax experts, including Shehan Chandrasekera of CoinTracker, emphasized that the relief is automatic and requires no immediate action. However, starting Jan. 1, 2026, CeFi brokers are expected to support multiple accounting methods, and users must choose one to avoid defaulting to FIFO.
This development follows the IRS’s recent broker reporting rule under the Infrastructure Investment and Jobs Act, which controversially expanded reporting requirements to include decentralized finance (DeFi) platforms. Critics argue this move exceeds Treasury’s authority and violates the Administrative Procedure Act.
Taxpayers are urged to maintain detailed records or use reliable tax software to ensure compliance and avoid potential tax discrepancies.
