The IRS has issued Notice 2025-7 to address potential tax complexities for cryptocurrency holders using centralized finance (CeFi) brokers in 2025. The relief measure allows taxpayers to avoid the default First In, First Out (FIFO) method for reporting cryptocurrency sales and instead use their own records or tax software to specify the assets sold. This flexibility helps mitigate increased tax liabilities that could arise from FIFO, particularly in a bullish market.
The United States Internal Revenue Service has introduced a temporary relief measure to address potential tax challenges for cryptocurrency holders using centralized finance brokers in 2025.
If holders do not choose a preferred accounting method – such as Highest In, First Out or Specific Identification – brokers will default to First In, First Out . This default method can increase tax liabilities, particularly in a bullish market, by prioritizing the sale of the earliest purchased assets, which often have the lowest cost basis.
The relief allows taxpayers to bypass the default FIFO method by using their own records or crypto tax software to specify which assets are being sold, offering greater flexibility during this transitional period.Chandrasekera clarified that this relief is automatic and requires no immediate action from taxpayers. However, starting January 1, 2026, CeFi users must select an accounting method with their brokers to avoid defaulting to FIFO.
CRYPTOCURRENCY TAX IRS Cefi FIFO
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