Crypto cost basis: how to rebuild it after an exchange dies

What is cost basis?

The statute is one sentence long. The basis of property is its cost, unless another part of the code says otherwise [1]. For crypto bought with dollars, the IRS FAQ reads cost as the amount spent to acquire it, including fees, commissions, and other acquisition costs, in US dollars [2]. The gain or loss on a later sale is the proceeds minus that basis.

Crypto received for services or for other property has a basis too. The FAQ sets it at the fair market value of the crypto, in US dollars, on the date it was received [2]. A hard-fork airdrop takes the amount included in income as its basis [2]. Every one of those is a dated dollar figure that has to come from somewhere.

What changed on January 1, 2025?

Basis used to be tracked however the holder tracked it. Since January 1, 2025 the rules read each wallet or account on its own, and old basis had to be sorted into the wallets that held the tokens [3]. Rev. Proc. 2024-28 gave a safe harbor for doing that: any reasonable allocation of unused basis to a wallet holding the same number of units, made as of January 1, 2025 [3].

The safe harbor had a deadline, and it has passed for most holders. A specific-unit allocation had to be finished before the earlier of the first sale of that asset on or after January 1, 2025 and the due date of the 2025 return, extensions included [3]. A global allocation, a written rule for how basis is assigned, had to be described in the holder’s records before January 1, 2025 [3]. A holder who sold nothing in 2025 and has not filed the 2025 return may still be inside the first window.

There is a second piece of relief for tokens held at a broker. Without an identification, units sold from a broker account go first in, first out [2]. Notice 2025-7 let a holder identify units through their own records instead, for sales from January 1, 2025 through December 31, 2025 [4]. Notice 2026-20 extended that relief period to December 31, 2026 [5].

What does a 1099-DA report?

From 2026 on, a broker reports gross proceeds for every digital asset it sold for a customer [6]. Basis is reported only for a covered security: a digital asset acquired after 2025 in an account the broker provided custody for, and held there until the broker sold it [6]. For anything else the basis box is voluntary, which in practice means empty.

So the form answers the proceeds side and not much else. Tokens bought before 2026, tokens moved in from a wallet, and tokens bought on an exchange that no longer exists all arrive with no basis on the form. The holder supplies it, from records.

In what order does a basis get rebuilt?

The order runs from the most direct record to the least. Each step fills in what the one before it could not.

• Exchange exports first. A trade history export from the exchange that sold the tokens carries the date, the amount, the price paid, and the fee. That is the basis in one line.
• Wallet history next. A block explorer shows every transfer into and out of an address, with a date and a transaction hash. It shows the amount received and the fee paid on-chain. It does not show what was paid for the tokens.
• A dated price from a named source. For a transfer with no export behind it, the basis is the dollar value on the acquisition date. The source of that price is named in the records, and the same source is used every time.
• Fees on top. The FAQ counts fees and commissions as part of the cost [2]. A network fee paid to acquire the tokens is part of the basis; a fee paid to sell them reduces the proceeds.

The records that survive are the ones that decide the number. The FAQ’s list for identifying specific units names the date and time each unit was acquired, the basis and fair market value at acquisition, the date and time it was disposed of, and what came back [2]. A rebuilt basis that carries those four things holds up as well as a live export.

What if no record exists at all?

The IRS FAQ requires records sufficient to establish the positions taken on a return [2]. The only sentence in it about a basis with no documentation is about gifts: when the donor’s basis cannot be substantiated, the basis is zero [2]. This site has found no primary source that states a general rule for a purchase with no record behind it, so this guide prints none.

What can be said is what the records do. A basis of zero makes the whole sale proceeds a gain. A basis with a record behind it, even a rebuilt one, is a number the return can carry.