DeFi Tax Reporting Requirements: What You Need to Know in 2026

When you trade ETH for USDC on a decentralized exchange, or stake your ADA to earn rewards, or add liquidity to a pool on Uniswap - you’re not just participating in DeFi. You’re also creating a taxable event. And as of 2026, the IRS doesn’t care whether you used a centralized exchange or a smart contract. If you made a profit, you owe taxes.

The rules changed dramatically in 2025. What was supposed to be a sweeping new system for tracking DeFi transactions? Gone. What remains? A confusing patchwork of obligations that puts the entire burden on you - the user. No more automatic reports from DeFi platforms. No more broker filings. Just you, your wallet history, and a mountain of records you probably haven’t kept.

DeFi Brokers Are No Longer Required to Report

In December 2025, the IRS and Treasury rolled out final rules that would have forced DeFi platforms - like Uniswap, Curve, or Aave - to act like brokers. That meant collecting user data, tracking every trade, and filing Form 1099-DA for every digital asset sale or exchange. It was meant to close a loophole. But by April 2025, Congress passed a law that wiped those rules off the books.

So right now, DeFi platforms do not file Form 1099-DA. They don’t report your swaps, staking rewards, or liquidity provision to the IRS. That’s not because these activities are tax-free. It’s because the government decided not to force decentralized systems to comply.

This doesn’t mean you’re off the hook. It means you’re now the sole record-keeper. If you don’t track your own transactions, the IRS won’t have a record - but that doesn’t stop them from auditing you later.

What Still Gets Reported? Centralized Exchanges

While DeFi is quiet, centralized platforms like Coinbase, Kraken, and Gemini are still busy filing. For trades made in 2025, they sent Form 1099-DA to users and the IRS in early 2026. That form shows the total gross proceeds from sales and exchanges - but not your original cost.

For 2026, those same platforms will start reporting cost basis too. That’s the price you paid when you bought the asset. But again, this only applies to trades done through their platform. If you bought BTC on Coinbase, sold it on Uniswap, and bought ETH on Binance - only the Coinbase and Binance parts get reported. The Uniswap trade? Invisible to the IRS.

This creates a dangerous blind spot. You could have made $50,000 in profit on DeFi and never seen it on a 1099. The IRS will only see the $5,000 you made on Coinbase. That mismatch is a red flag.

Every DeFi Transaction Is Taxable - Even If It’s Not Reported

Just because a DeFi platform doesn’t report doesn’t mean the IRS ignores it. The IRS has always treated digital assets as property. That means every swap, every staking reward, every liquidity pool deposit or withdrawal - it’s all taxable.

• Swaps: Exchanging one crypto for another is a taxable event. Selling ETH for DAI? You owe capital gains tax on the difference between what you paid for ETH and what it was worth when you swapped it.
• Staking rewards: Every time you earn ETH or SOL from staking, that’s ordinary income at the fair market value the day you received it. If you later sell those rewards, you owe capital gains on the increase.
• Liquidity provision: Adding ETH and USDC to a pool isn’t a gift - it’s a trade. Removing your share later? That’s another trade. If the value of your assets changed between deposit and withdrawal, you have a taxable gain or loss.
• Lending: If you lend crypto through Aave or Compound and earn interest, that’s income. If you get repaid in a different asset, that’s a swap.
• NFTs: Buying an NFT with ETH? Taxable. Selling it for DAI? Taxable. Trading it for another NFT? Also taxable.

There’s no exemption. No “de minimis” rule for DeFi. Even if you only swapped $200 worth of tokens, you still have to report it. The $10,000 de minimis threshold only applies to brokers - not to you.

Your Responsibility: Tracking Cost Basis

The IRS doesn’t care how messy your records are. They only care that you report correctly. And that means knowing your cost basis - the original price you paid for each unit of crypto.

For centralized exchanges, you’ll get that data. For DeFi? You’re on your own. You need to track:

• When you bought each coin
• How much you paid
• What wallet it was sent to
• When you used it (for a swap, staking, etc.)

There are three methods to calculate gains:

1. FIFO (First In, First Out): The default. The first coins you bought are the first ones sold. Simple, but not always optimal.
2. Specific Identification: You can pick exactly which coins you’re selling - but only if you document it before the transaction. You need a timestamp, wallet address, and cost basis for each unit.
3. Average Cost: Not allowed. The IRS doesn’t let you average your crypto purchases like you can with stocks.

If you don’t identify specific units, FIFO applies. That means if you bought BTC in 2020 for $10,000 and sold it in 2025 for $60,000, you owe tax on $50,000 - even if you bought more BTC later at $40,000.

What’s Not Reported - But Still Taxable

There are six major DeFi activities that brokers are temporarily exempt from reporting - but they’re still taxable:

• Wrapping/unwrapping (e.g., wETH ↔ ETH)
• Liquidity provision and removal
• Staking rewards
• Lending and borrowing
• Short sales
• NFT trades

Even if your wallet shows $15,000 in staking rewards over the year, and your 1099-DA says $0 - you still owe income tax on that $15,000. The IRS knows how blockchain works. They can see your wallet activity. They just don’t have a broker to ask.

That’s why audits are rising. Taxpayers who report only what’s on their 1099-DA are getting flagged. The IRS uses blockchain analytics firms like Chainalysis to trace transactions across wallets. If you have $200,000 in DeFi activity and only report $20,000 - you’re asking for trouble.

How to Stay Compliant

Here’s what you need to do right now:

1. Track every transaction. Use a crypto tax tool like Koinly, CoinTracker, or ZenLedger. Connect your wallets (MetaMask, Trust Wallet, etc.) and let them pull on-chain data. Don’t rely on exchange reports alone.
2. Classify each event. Was it a swap? A reward? A transfer? Each has different tax treatment.
3. Document specific identification. If you want to use specific unit tracking, write down the exact transaction IDs and cost basis before you spend.
4. Keep records for 7 years. The IRS can audit crypto transactions for up to seven years after filing.
5. Report everything on Form 8949. Even if it’s not on a 1099-DA, list it. Use Schedule D to summarize capital gains.

Most people think they’re safe if they don’t get a 1099. They’re wrong. The IRS doesn’t need a broker to know what you did. They have the blockchain.

The Bigger Picture: What’s Next?

Is this the end of DeFi reporting? Not likely. The White House has signaled that international standards like CARF (Common Reporting Standard) may eventually require countries to report DeFi transactions. The U.S. could reverse course again. Congress might restore reporting rules. The IRS might issue new guidance. The rules are in flux.

But here’s the truth: tax obligations don’t disappear just because reporting does. The law hasn’t changed. You still owe taxes on every gain, every reward, every swap. The only thing that changed is who’s supposed to tell the IRS.

So if you’re using DeFi in 2026, treat it like a business. You’re not just trading crypto - you’re running a personal financial operation with tax consequences. And if you’re not keeping records, you’re gambling with your audit risk.