IRS Crypto Tax Policy in 2026: What Changed and What Matters

Reviewed 2026-05-28 by DeFi Intel Research Desk

What it is

The Internal Revenue Service (IRS) is the federal tax authority of the United States, founded in 1862. Its jurisdiction covers all US taxpayers and entities with US tax obligations. The agency collects federal taxes and enforces the Internal Revenue Code. For digital assets, the IRS is the primary regulator of tax compliance, issuing guidance and reporting rules. Its crypto-related mandate flows from its general authority to interpret and enforce tax law, which it has applied to virtual currencies since 2014.

Crypto framework and stance

Since IRS Notice 2014-21, cryptocurrency has been classified as property for federal tax purposes. This means general tax principles apply: capital gains on disposal, ordinary income on receipt (e.g., from mining, staking, or airdrops). The 2024 finalization of custodial broker reporting rules, mandated by the Infrastructure Investment and Jobs Act, brought a major operational change. From 2025, custodial exchanges must issue Form 1099-DA to taxpayers and the IRS, reporting gross proceeds from digital asset transactions. Staking rewards are explicitly taxable at fair market value upon receipt, per Revenue Ruling 2023-14. In 2025, the DeFi broker rule – which would have extended broker reporting to non-custodial platforms – was rescinded by Congress under the Congressional Review Act. As of 2026, the IRS framework thus distinguishes between custodial intermediaries (with mandatory third‑party reporting) and decentralized or non-custodial actors (where self‑reporting remains the primary compliance mechanism).

Notable actions

The IRS has taken several decisive actions shaping crypto tax enforcement.

Finalized custodial broker reporting (2024): Implementing the 2021 infrastructure law, this rule defined a “broker” to include custodial exchanges, requiring them to file 1099-DA forms starting with the 2025 tax year. It significantly expands IRS visibility into taxpayer crypto activity.
DeFi broker rule rescinded (2025): The Treasury’s proposed expansion of broker definition to many DeFi platforms was overturned by a Congressional Review Act resolution. This maintains the reporting gap for non-custodial crypto.
Coinbase John Doe summons (2017): A wide‑ranging summons initially sought records on all Coinbase users. After litigation, the IRS obtained transaction data on thousands of accounts, signaling its intent to use third‑party data to detect non‑compliance.
Operation Hidden Treasure: An IRS Criminal Investigation initiative launched in 2021 that uses blockchain analytics to trace unreported crypto income and prosecute tax evasion. It continues to generate referrals and cases.

Key figures

The current IRS Commissioner is Billy Long, who took office in 2025. As head of the agency, he oversees all tax administration and enforcement priorities. Under his tenure, the rescission of the DeFi broker rule took effect while existing 1099-DA reporting moved forward. No public departure from established crypto‑as‑property policy has been signaled; the Commissioner emphasizes using data and analytics to close the tax gap, which includes digital asset non‑compliance.

What it means for users and builders

For individual taxpayers, virtually every crypto transaction is a taxable event. Custodial exchange users now receive 1099-DA forms that the IRS also sees, making oversight more systematic. Self‑custody and DeFi users must still track and report gains and losses without third‑party reporting; the IRS relies on audits and blockchain tracing to catch evasion. Staking, mining, and airdrop income must be reported at receipt. For builders and DeFi platforms, the rescinded broker rule removes near‑term compliance burdens, but the IRS can still investigate non‑compliance and may issue new guidance. Record‑keeping is essential: the burden of proving cost basis and holding periods lies on the taxpayer. Overall, the line is clear: all crypto income and gains must be reported, and the IRS has growing data tools to verify.

Outlook

Under Commissioner Long, the IRS is likely to continue leveraging the 1099-DA data stream for automated matching and audits. DeFi may see renewed rulemaking if the administration shifts, but for now self‑reporting persists. Enforcement emphasis on staking and DeFi income is expected to intensify, supported by Operation Hidden Treasure and expanded blockchain analytics. The fundamental property framework remains unchanged, but reporting mechanics will continue to evolve. Taxpayers and platforms should expect incremental tightening of information reporting and continued criminal referrals for deliberate evasion.

Frequently asked questions

Does the IRS tax cryptocurrency?

Yes. Since 2014, the IRS treats cryptocurrency as property for federal tax purposes. This means selling, trading, or spending crypto triggers capital gains, and receiving it as income (e.g., from mining, staking, or airdrops) is taxable at fair market value.

What is Form 1099-DA for crypto?

Form 1099-DA is the tax form that custodial brokers – such as centralized exchanges – must file with the IRS and send to taxpayers starting with the 2025 tax year. It reports gross proceeds from digital asset transactions, providing the IRS with a direct data source to verify taxpayer returns.

Are staking rewards taxed by the IRS?

Yes. Under Revenue Ruling 2023-14, staking rewards are included in gross income for the tax year in which the taxpayer gains dominion and control over them. Their fair market value at the time of receipt is the taxable amount.