Prepare Now for New Tax Reporting Rules for Digital Assets in 2025

At Gemini, our goal is to empower our customers to comply with all relevant tax laws in the US and abroad. To that end, there are a number of new US tax reporting rules that will go into effect January 1, 2025 that may affect customers’ tax reporting obligations.

In June 2024, the US Treasury Department issued final regulations for digital asset broker reporting. These new rules require US crypto exchanges including Gemini to report sales or trades of digital assets to both customers and the IRS on Forms 1099-DA, beginning with transactions occurring on or after January 1, 2025.

In anticipation of these regulations, Gemini began generating gain/loss statements in 2023, enabling customers to choose their preferred accounting method and submit cost basis information for assets transferred on to the Gemini exchange. Below we outline the changes that Gemini customers can expect ahead of this coming tax year. However, please be advised that Gemini is unable to provide tax advice to customers. For questions pertaining to your unique situation please consult with a tax professional.

New Reporting Measures

Gemini customers, along with all US customers of US digital asset exchanges, will receive Forms 1099-DA to report proceeds from digital asset sales beginning with tax year 2025. The first Forms 1099-DA will be issued in February 2026.

• Gemini may request certain information from customers leading up to this reporting timeline, such as the accounting method preferred for dispositions of digital assets (e.g., highest-in first-out or HIFO). In the absence of a customer selection, Gemini will be required to use the default first-in first-out (or FIFO) method.

• Form 1099-MISC reporting for income over $600 from staking and refer-a-friend bonuses will continue as usual.

• Starting in 2026, Form 1099-DA will include both the cost basis (initial purchase value) and the sale proceeds for “covered assets.” A covered asset is an asset that was bought on the exchange or after January 1, 2026.

• For these covered assets, Form 1099-DA will show any tax gain or loss, making it easier for customers to report these gains or losses on their US tax returns.

• Remember, Form 1099-DA is sent to both customers and the IRS, so customers should expect to reconcile this form with their tax return.

• It is important for customers to complete their preferred accounting method to assist in a reconciliation of assets that remain in the account for sale on January 1, 2026.

Tax Documentation Update

Gemini will need to collect valid tax certifications from all customers. If tax information is needed for any account, customers will receive a request to log in and certify their tax status. During this period, all new accounts must complete an electronic Form W-9 or W-8 as part of their onboarding process, and existing accounts will also be required to complete these forms.

• 2025: Accounts with a US address and no valid US Tax Identification Number must submit either a Form W-9 to certify their US TIN, or a Form W-8 to confirm non-US status. Gemini is required to verify name/TIN combinations using the IRS TIN Matching system to determine validity.
• 2026: All new accounts opened in 2026 must complete a valid Form W-9 or W-8. All accounts opened prior to 2026, even those who have had their US TIN successfully verified, must complete a valid Form W-9 or W-8 prior to 12/31/2026.

Backup Withholding

Gemini will be required to subject sales proceeds to 24% backup withholding tax for any account that has not provided a valid tax certification as required. Gemini may disallow asset sales for accounts that have not provided the required tax documentation. If backup withholding is applied, the tax will be reported to the customer and to the IRS on a Form 1099-DA to facilitate a reclaim of the amount withheld by the customer with the filing of the customer’s US tax return.

How To Prepare

We recommend that customers take the following steps to prepare:

• Visit the Gemini Tax Center and select an accounting method for asset sales on the exchange, as well as input required information for any transferred assets to facilitate disposition of assets as per the method selection. In the absence of an accounting method selection, FIFO (First-In-First-Out) will be the default method applied.
• Monitor your Gemini account for requests for tax certifications so that your certification can be completed when required.
• Revisit historical digital asset tax calculations so you can be prepared to review 2025 Forms 1099-DA when received and reconcile appropriately.

Moving Forward

As with all new reporting requirements, we expect that there will be growing pains in reconciling, but we are happy to work with our customers to make the transition as painless as possible.

If you have any questions regarding requests or forms received, please do not hesitate to contact @GeminiSupport. However, please note that we are not permitted to provide tax advice to customers. When in doubt, please consult your tax advisor.

Onward and Upward,
Team Gemini

Disclaimer: The information above is provided for general informational purposes and should not be considered tax advice. Please consult a tax advisor to determine your personal tax obligations that result from your activities on Gemini, including dispositions, earnings, and rewards.