Year-in-Review: Major Crypto & Tax Developments of 2025

The year 2025 has been another landmark period for the digital asset space, marked by significant regulatory shifts, technological advancements, and evolving tax guidance.

For investors and businesses in California, staying ahead of these changes is crucial for compliance and strategic planning. As the year draws to a close, let’s review the most impactful crypto tax news and regulatory developments of 2025.

1. The Implementation of the Infrastructure Act’s Broker Reporting Rules

After years of discussion and delays, the controversial broker reporting requirements from the 2021 Infrastructure Investment and Jobs Act finally took effect. As of January 1, 2025, a broad range of entities, now defined as “brokers,” are required to issue Form 1099-DA (Digital Assets) to their customers and the IRS.

The definition of a broker was a major point of contention, but the final regulations clarified its scope, primarily targeting centralized exchanges, payment processors, and certain hosted wallet providers.

This means the IRS is now receiving a massive influx of third-party data on digital asset transactions, significantly increasing their ability to track gains and identify non-compliance.

For taxpayers, this underscores the absolute necessity of meticulous record-keeping, as any discrepancies between your reporting and the 1099-DA forms will be automatically flagged.

2. Increased IRS Enforcement and the “John Doe” Summons

Throughout 2025, the IRS continued its aggressive enforcement stance on crypto. We saw the agency successfully issue several “John Doe” summonses to smaller, decentralized, and international exchanges that have a user base in the United States. This legal tool allows the IRS to seek information about an entire class of unidentified taxpayers who may have failed to comply with tax laws.

This development signals that no platform is off-limits. The era of believing that transactions on non-U.S. exchanges are beyond the IRS’s reach is definitively over. This enforcement push makes it more critical than ever for taxpayers to consider voluntary disclosure or amend prior-year returns if they have unreported crypto income.

3. New Guidance on Staking and DeFi Lending Rewards

One of the most welcome developments of 2025 was new, clearer guidance from the IRS on the tax treatment of staking and DeFi lending rewards. The new rules clarified that rewards are to be treated as ordinary income at the time they are earned or constructively received (i.e., when you have control over them), based on their fair market value at that moment.

This guidance provides much-needed clarity for participants in the proof-of-stake and decentralized finance ecosystems. However, it also creates a significant record-keeping burden, as taxpayers must now track the value of rewards daily or even hourly.

An experienced crypto tax lawyer can help implement systems to manage this compliance challenge effectively.

4. The Rise of Tokenized Real-World Assets (RWAs)

While not a direct tax rule, the explosion of tokenized real-world assets on the blockchain was a major financial trend in 2025. Tokenizing assets like real estate, art, and private equity brings new liquidity but also new tax complexities. Each tokenized asset carries the tax implications of its underlying asset class, but with the added complexity of blockchain-based transactions.

For example, earning fractional rental income from a tokenized property or selling a token representing a share of a venture fund creates unique reporting challenges. We expect to see the IRS issue specific guidance on RWAs in the coming years.

Looking Ahead to 2026

The developments of 2025 have set the stage for an even more regulated and transparent digital asset landscape in 2026. The message from regulators is clear: crypto is being fully integrated into the traditional financial and tax systems.

For California investors and businesses, proactive compliance is the only viable strategy. If you have questions about how these changes affect you, it’s time to consult with a crypto tax professional who specializes in digital asset taxation.

Disclaimer: This article provides a general overview and does not constitute legal or tax advice. Consult with a qualified professional for advice regarding your specific circumstances.