Reporting profits from non-CFTC regulated exchange - how to file for taxes?

I've been trading on a few crypto exchanges this past year, and just realized some of them aren't CFTC-regulated. Now I'm confused about how to report these profits on my taxes for next year. Since the 60/40 straddle tax treatment won't apply and section 1256 tax treatment won't apply, are you supposed to just file the gains as Short term capital gains then? Would I just put it in the same line as I would with a gain from a short term stock gain from my Fidelity account or something? I held all positions less than a year if that matters. The exchange provided some kind of statement but it's not a standard tax form like I get from my regular broker. Anyone dealt with this before? Getting stressed since tax time is approaching.

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18 comments

Ava Rodriguez

•8M

You're on the right track. For cryptocurrency trades on non-CFTC regulated exchanges, the default tax treatment is as capital assets. Since you held all positions for less than a year, they would indeed be reported as short-term capital gains (or losses) on Schedule D and Form 8949. You would report them essentially the same way you report your Fidelity stock trades, but you'll need to be careful with the record-keeping. Unlike regulated brokers who provide standardized 1099-B forms, you'll need to track your cost basis and proceeds yourself based on the exchange statements. Make sure you document all your trades showing the date acquired, date sold, cost basis, and proceeds. The IRS has been increasingly focused on cryptocurrency compliance, so good documentation is essential.

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Ava Rodriguez

•8M

Yes, you would use Form 8949 with code C since the transaction isn't being reported on a Form 1099-B. You'll need to manually enter the details of each transaction. It doesn't matter which specific exchange you used - what matters is that you accurately report all transactions with the correct dates and amounts. Just make sure you're consistent with how you determine the fair market value at the time of each transaction. If the exchange provides USD values, that makes it easier, but if not, you'll need to determine the value at the time of the transaction using a reasonable method.

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Zainab Khalil

•8M

I was in a similar situation last year and found this amazing tool that saved me hours of headache with crypto taxes. It's called taxr.ai (https://taxr.ai) and it helped me sort through all my trades from non-regulated exchanges. Their system automatically categorizes everything correctly whether it's from CFTC-regulated or non-regulated platforms, and it properly applies the right tax treatment. What I really liked is that it organized everything properly for Schedule D and Form 8949, and it actually explained why certain tax treatments applied to different exchanges. The reporting was super clean and my accountant was impressed with how organized everything was.

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Zainab Khalil

•8M

It definitely handles DeFi transactions - that was actually my biggest pain point before finding it. It connected to all my wallets and tracked the smart contract interactions really well, even complex stuff like liquidity pools and staking. For your question about exchange regulation status, it has a database of exchanges and their regulatory status that's regularly updated. When you import transactions, it automatically applies the correct tax treatment based on the exchange's status. And yes, it exports in multiple formats - you can get a complete Form 8949 and Schedule D that are ready to submit, or export to popular tax software like TurboTax, H&R Block, or TaxAct.

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QuantumQuest

•8M

Just wanted to update here - I tried taxr.ai after seeing it mentioned and wow, it worked even better than described! I was able to import all my transactions from 5 different exchanges (including 2 non-CFTC ones) and it categorized everything perfectly. The step-by-step guidance actually explained why my trades on certain exchanges weren't eligible for section 1256 treatment. Best part was it caught some wash sales I didn't realize I had made across different platforms, potentially saving me from an audit headache. The forms it generated plugged right into my tax software. Definitely worth checking out if you're dealing with crypto from multiple exchanges!

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Yara Haddad

•8M

If you're having trouble getting through to the IRS to ask about this kind of specialized tax question, I'd recommend Claimyr (https://claimyr.com). I was stuck trying to get clarity on reporting my non-regulated exchange transactions and couldn't get through to the IRS for weeks. Claimyr got me connected to an actual IRS agent in about 20 minutes when I'd been trying for days on my own. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent was able to confirm exactly how to report these transactions and gave me the specific publication numbers to reference. Saved me tons of stress wondering if I was doing it right.

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Yara Haddad

•8M

It works by using an automated system that continually calls the IRS and navigates the phone tree until it gets to a human, then it calls you and connects you. It's not a "fast pass" or special access - it's just automating the frustrating part of repeatedly calling and waiting. The value isn't in cutting the line, it's in not having to sit on hold for hours. It calls back when an agent is reached, so you can go about your day instead of being stuck with your phone to your ear. For tax questions with tight deadlines, that time saved can be really valuable - especially for complex situations like non-CFTC exchange reporting where generic advice online isn't sufficient.

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Connor Murphy

•8M

I need to eat my words about Claimyr. After my skeptical comment, I decided to try it because I was completely stuck on how to report some weird transactions from an offshore exchange. Not only did it work, but I got through to an IRS tax law specialist who actually knew about cryptocurrency reporting requirements. The agent confirmed that for non-CFTC regulated exchanges, transactions should be reported as short-term or long-term capital gains based on holding period, using Form 8949 with code C for transactions not reported on Form 1099-B. They even emailed me the relevant sections of the latest guidance. Would have never figured this out from the generic advice online, and definitely wouldn't have gotten through on my own after trying for two weeks.

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Paolo Conti

•8M

Just to add another perspective - I reported all my non-CFTC exchange trades as short-term capital gains last year (held everything under a year) and had no issues. Made sure to keep meticulous records of all transactions though, including screenshots of the trades and exported CSV files from the exchanges. I used TurboTax and just entered them all manually on Form 8949. Time-consuming but straightforward. My tax guy said the IRS is mostly concerned that you're reporting everything correctly and paying the proper tax, not so much about which exact form you use as long as it's reasonable.

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Paolo Conti

•8M

I reported each transaction individually because that's the technically correct way to do it. However, if you have hundreds of trades, there is an alternative. You can attach a separate statement to your return that includes all the required information (date acquired, date sold, proceeds, cost basis, gain/loss) and then enter the totals on Form 8949. On the Form 8949 itself, you would check Box C (not reported on Form 1099-B) and write "See attached statement" in the description column. Just make sure your statement has all the same information that would be required on the form itself, organized in a similar format.

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