If you are an American taxpayer who dealt with cryptocurrencies, NFTs, stable coins, or any other digital assets in 2023, it’s time to pay attention. The IRS (Internal Revenue Service) has issued an important reminder: the tax deadline is less than 10 days away, and failing to report your digital asset activity could result in heavy fines or audits.
In this guide, we explain what’s happening, what you need to do, and why it matters—in simple language without the complicated tax jargon.
Digital Assets Are Treated Like Investments, Not Currency
First things first—many people think of crypto as “money,” but the IRS doesn’t see it that way. According to the IRS, digital assets like Bitcoin, Ethereum, NFTs, and stable coins are treated the same way as stocks or property. That means any profits you made must be declared as income or capital gains.
Even if you just transferred crypto between wallets or received crypto through mining, staking, or as payment—you still need to report those activities.
What Changed: De Fi Broker Rule Cancelled
One big update this year is the removal of the De Fi broker regulation. Earlier, platforms in decentralized finance (De Fi) were asked to report user data and transaction volume. This rule was seen as too strict and harmful to innovation, and now, it’s been officially withdrawn.
However, this does not mean you’re off the hook. The IRS made it clear: even if platforms don’t report your activity, you still have to report it yourself.
So, all 2023 crypto and NFT transactions—whether done on centralized exchanges, through De Fi platforms, or even peer-to-peer—need to be carefully documented and submitted when you file your tax return.
What Exactly Needs to Be Reported?
You must report:
Buying and selling crypto
Trading between coins or tokens
Spending crypto (even small purchases)
Mining and staking rewards
NFT sales or creations (especially if the value exceeds $600)
Using stable coins in De Fi platforms for lending or farming
Even non-profit transactions, like transferring crypto from one of your own wallets to another, should be noted. The IRS uses advanced blockchain monitoring tools, so it’s important to be accurate to avoid triggering red flags.
Which Tax Forms Have Digital Asset Questions?
When you file your 2023 tax return using Form 1040, 1040-SR, or 1040-NR, you will notice a question right at the top that asks whether you were involved in any digital asset transactions.
You must answer “yes” or “no,” even if you only made one small transaction. Skipping this part or giving the wrong answer can lead to fines or audits.
Tools to Help You File Correctly
Many users turn to platforms like Coin Tracker, Koinly, or Token Tax, which link your wallets and exchanges to generate reports automatically. These are useful for tracking hundreds of small trades or wallet movements.
However, the IRS suggests double-checking all the data manually, especially if you were active in De Fi, NFT marketplaces, or if you used multiple wallets. Hiring a tax advisor with crypto experience is also a good idea if your transactions are complex.
Fines Are Serious: Transparency Is a Must
The IRS is not taking digital asset reporting lightly anymore. They’ve joined hands with tech companies and are using AI-powered audits to track down incorrect or missing reports.
If you fail to declare your crypto gains:
You could face a fine of 5% to 25% of the amount owed
Interest charges may also apply
In extreme cases, fraud charges or legal action could follow
This applies even to stable coins, which are usually tied to real currencies like the US dollar. If you used stable coins for staking, farming, or lending, you still need to report those earnings.
What About NFTs?
The IRS has clarified that NFTs are taxable like other digital assets. If you made more than $600 from selling NFTs in 2023, you need to declare it.
How they’re taxed depends on what you did:
If you created and sold NFTs as part of a business, it’s taxed like business income.
If you bought and sold NFTs as an investor, it’s treated as capital gains.
Either way, keeping proper records of sales, costs, and dates is necessary.
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