Crypto assets bought in 2026 will only have their cost basis reported by the exchange if two conditions are met: first, the asset must have been bought on or after January 1, 2026; second, from purchase to sale, it must have stayed in the same exchange account and never been transferred out.
Simply put, the exchange is only responsible for the cost basis of assets it has "watched grow" itself. Coins transferred in from an external wallet, or bought in 2025 or earlier, are not within the mandatory reporting scope.
Step 1: Determine Whether Your Asset Is "Covered" or "Noncovered"
There is only one distinction: whether it was bought internally on this platform after 2026.
Scenario A: Covered Security — the exchange will report the cost basis
Purchase date: on or after January 1, 2026;
Holding method: from purchase to sale, the asset has always stayed in the same exchange's custodial account without being transferred out.
What is reported: on Form 1099-DA, the exchange will fill in both the Proceeds and Cost Basis fields.
Scenario B: Noncovered Security — the exchange will not report the cost basis
Purchase date: bought in 2025 or earlier;
Source of transfer: moved to the current platform from another exchange or a self-custody wallet;
No matter when you bought it, as soon as it has been transferred across platforms once, the cost trail is broken. The exchange does not have your original purchase records, so the cost basis field will be left blank.
Risk reminder: the "covered" and "noncovered" label is not determined by the asset type (like BTC, ETH) but by "purchase date and transfer path." The same BTC bought in 2025 is noncovered on the exchange, while the same coin you buy again on that exchange after 2026 is covered. The two types of assets are handled completely differently on Form 1099-DA.
Step 2: Identify Which "2026 Buys" Will Not Report Cost Basis
Even if you "bought" in 2026, the following two types will still not have cost basis reported:
Scenario A: transferred in from an external wallet/platform and sold in 2026 Suppose you transferred 1 ETH from MetaMask to an exchange in March 2026, and then sold it in June 2026. Although this 1 ETH was sold in 2026, the purchase did not occur on that platform. The exchange does not have your purchase cost data, so the cost basis on Form 1099-DA will still be blank.
Scenario B: bought in 2025 and sold in 2026 Regardless of which month in 2025 you bought it, as long as the purchase date is before 2026, the exchange is not obligated to report the cost basis. On your 2026 Form 1099-DA, this asset will only show the sale proceeds; the cost basis field will be left blank or checked as "Noncovered."
Step 3: Assess the Actual Coverage Rate of "Covered Assets"
Even though the rules define "covered assets," the actual proportion that can be covered may be lower than you think.
2026 is the first year of mandatory cost basis reporting. Deloitte's tax experts estimate that in the first year of actual practice, only about 5% of customer transactions will truly meet the "covered asset" conditions. The core bottleneck is that the traditional securities market's "inter-broker cost transfer" mechanism simply does not exist in crypto — when you move coins from one exchange to another, cost data does not follow, so the chain breaks.
Common reason for failure: many people think that from 2026 on, "all transactions will report cost basis." In reality, the exchange only reports the part it "raised" itself. Your positions carried over from 2025, coins transferred in from wallets, and coins moved across platforms all require you to fill in the cost basis yourself.
How to Verify After Completion
After you receive your 2026 Form 1099-DA, check these two places:
Box 1g (Cost or other basis) — if a number is filled in here, it means this transaction is a "covered asset" and the exchange has reported the cost basis;
Box 9 (Noncovered security) — if this box is checked, it means this is a "noncovered asset," and you will need to calculate and report the cost basis yourself.
Next action to take: for assets newly bought in 2026, it is recommended not to casually transfer them across platforms after purchase — once transferred, the cost basis changes from "covered" to "noncovered," and you will need to track it yourself. If a transfer is necessary, at least make sure you have exported a complete CSV of the purchase records before the transfer and keep a local backup.
