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<\/p>\nThe Internal Revenue Service (IRS) has announced a temporary relief measure aimed at benefiting cryptocurrency users who rely on centralized finance (CeFi) exchanges. Shehan Chandrasekera, CoinTracker\u2019s Head of Tax Strategy, shared the news on the social media platform X, saying, \u201cThe IRS has issued a temporary relief notice that\u2019s great news for crypto holders interacting with CeFi exchanges in 2025!\u201d<\/p>\n
The relief addresses concerns tied to the finalized Section 6045 custodial broker regulations, which will take effect on January 1, 2025. These regulations mandate the use of FIFO (First-In, First-Out) accounting for digital assets unless an alternative method like HIFO (Highest-In, First-Out) or Specific Identification (Spec ID) is selected. Chandrasekera noted a major challenge: \u201cAs of January 1, 2025, nearly all CeFi brokers were unprepared to support Spec ID.\u201d Without this option, many crypto investors would have defaulted to FIFO, potentially leading to higher taxes on asset sales.<\/p>\n
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The IRS\u2019 temporary relief permits taxpayers to continue using personal records or tax software to specify which cryptocurrency units are being sold. Shehan Chandrasekera explained, \u201cThis means that if you sell assets through a CeFi broker, you can still rely on your own records or crypto tax software to document the specific units sold.\u201d<\/p>\n
This relief applies solely to CeFi transactions occurring between January 1, 2025, and December 31, 2025. After this period, taxpayers must formally choose an accounting method with their broker. Chandrasekera emphasized the importance of this step, advising:<\/p>\n
\u201cBe sure to select your accounting method with your CeFi exchange on January 1, 2026. If you don\u2019t make a choice, you\u2019ll likely default to FIFO.\u201d<\/p>\n
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Chandrasekera stressed the importance of ensuring that tax software aligns with the accounting method selected by the CeFi broker. \u201cEnsure the accounting method used by your CeFi broker matches your crypto tax software so your tax lots remain in sync,\u201d he advised.<\/p>\n
He also clarified that no immediate action is required to benefit from this relief. \u201cTo be clear, you don\u2019t need to file anything with the IRS right now to qualify for this relief. It\u2019s automatically applied to you,\u201d Chandrasekera assured taxpayers.<\/p>\n