Does Bybit Report to the IRS?

If you've previously used Bybit and are a US resident, the IRS may know about your crypto. Learn about Bybit in the US and what the IRS knows about your crypto.

Is Bybit legal in the US?

No. Bybit was blocked from operating in the USA in 2021. It was never licensed to operate in the USA and failed to meet regulatory requirements, including adequate KYC procedures, among other issues.

However, as an exchange still operating with minimal KYC procedures in place, some US residents still opt to use the exchange via VPN, despite this being a violation of Bybit’s terms of service. Doing this comes with significant risk as Bybit may freeze accounts without KYC at its own discretion, leaving users without the ability to withdraw funds.

Read next: Best No KYC Crypto Exchanges

Why isn’t Bybit legal in the US?

The US has fairly stringent regulations for crypto businesses on both a federal and state level. This includes the requirement for exchanges to implement strong KYC procedures in order to operate. Bybit was banned from operating in the US after failing to meet these requirements. It doesn’t make the company ‘illegal’ per se, but as per Bybit’s own terms of service, it does not serve US residents.

Does Bybit report to the IRS?

Given that Bybit doesn’t operate in the US, it’s unlikely the platform shares data with the IRS currently. 

Exchanges that legally operate in the US must register with FinCEN (Financial Crimes Enforcement Network as Money Services Businesses (MSBs), and the SEC (Securities and Exchange Commission) also has federal regulatory oversight. As well as this, exchanges need to meet state operational requirements.

In other words, all exchanges operating in the US legally must implement KYC processes and follow reporting requirements, including issuing 1099 forms as required to both users and the IRS. 

Read next: Crypto 1099 Forms

What do crypto exchanges report to the IRS?

Crypto exchanges must issue 1099 forms as required, depending on their customers' transactions.

For additional income from crypto, users may receive 1099-MISC forms, which are issued for any user with more than $600 in income throughout a given financial year.

Under new regulations, exchanges must begin issuing 1099-DA forms to users, which will contain much more information than previous 1099 forms, including details about every sale and trade of crypto. 

How do I report my Bybit taxes to the IRS?

If you’ve earned income, gains, or incurred losses from trading on Bybit, it’s important to report these to the IRS, either through an amended return or by using the voluntary disclosure program if applicable.

Bybit doesn't issue tax documents for US taxpayers, so many traders use a crypto tax calculator like Koinly to accurately calculate their profits, losses, and other taxable events.

Report your crypto taxes with Koinly

Koinly makes it easy to report your Bybit transactions by automatically importing your trading data, either through API integration or by uploading a CSV file.

Once your transactions are synced, Koinly calculates your capital gains, losses, income, and other relevant figures, then generates IRS-ready tax reports. Learn more about doing your Bybit taxes with Koinly.