Hi everyone,
We’ve published a new article on our Help Center to guide our US users on migrating to wallet-based cost tracking, in line with the IRS requirements starting January 1, 2025. This article explains how the migration will work, the default allocation method, and answers the questions that the users have in an FAQ section.
Read the full article here: Migrating to Wallet-Based Cost Tracking Under New IRS Guidance
If you have any questions, feel free to reach out to us.
When will the migration happen?
Hi @Joey_H
The devs are working on the migration and it should be triggered soon. You will be informed once it goes through.
Hi, i’m looking for a better update rather than “Soon”. DO you have any updates?
Now that we’re one day away from March, do you have another ETA update? What’s taking so long?
Check out the thread below on our feedback portal regarding the migration:
Any update on this? I know this date has been pushed back several times.
Hey @peacew6
Wallet-based cost tracking migration has already been enabled for many portfolios that had already opted into wallet-based cost basis in their settings.
If you have not been migrated yet and you see the status as pending, you have two options:
Enable wallet-based cost tracking manually in your settings to trigger the migration immediately.
Wait for automatic migration, which we plan to roll out in April.
If you need help enabling wallet-based cost basis, you can refer to our guide here: Settings > Wallet-based cost tracking
Also check out Koinly Wallet-Based Cost Tracking Guide.
My Koinly account is set HIFO. Will the automatic migration automatically change to FIFO?
The Cost Tracking migration (whether automatic or manual) does not affect your cost basis method. If you wish to change your cost basis method, check out Settings > Cost basis migrations.
I’m trying to understand why the system is tracking cost basis two different ways now that wallet-based cost tracking is in place. It seems inconsistent to me.
Example 1:
I bought Bitcoin via Kraken over a year ago, so selling it today at Kraken would be long-term gain. However, I wanted to avoid having gains, so I bought new Bitcoin on Coinbase to transfer to a self-custody wallet for an ordinal purchase, and the sold Bitcoin’s cost basis was tracked by Koinly at that day’s purchase price at Coinbase (instead of the old Bitcoin purchased via Kraken over a year ago). This is what I expected and saved me on taxes - where the universal method would have cost me taxes on the gain made from 1+ year of holding bitcoin at the lower price.
Example 2:
I bought a Memecoin via Kraken in January at 5x the current price and transferred it to my self-custody wallet. Today, if I simulate buying the Memecoin again at Kraken and transfer it to my self-custody wallet with a sale for USDC, Koinly says my cost basis is from the higher priced transaction back in January (instead of the most recent purchase).
The only key difference between these two examples is a different “origination” for acquiring coin, but both sales were made after transfering to a separate wallet and then using that new wallet to execute the sale.
In case it matters: The reason I did the simulation was to see if I end up with a $0 cost basis if I transfer purchased coin from an exchange and then do a transaction in a self-custody wallet. Technically, the cost basis would have been at the exchange and not the self-custody wallet.
Hi @XTR755
The difference you’re seeing is due to wallet-based cost tracking in Koinly.
In short:
• Cost basis is now tracked per wallet, not globally if you have the wallet-based cost tracking.
• When you transfer coins, the original cost basis follows the coins into the new wallet.
• In your BTC example, you sent newly bought BTC to a wallet—so Koinly used the new cost basis from Coinbase.
• In the Memecoin case, the coins you sent were originally bought in January—so Koinly keeps that original (higher) cost basis even after the transfer.
So yes, the origin of the coins matters, and Koinly does not reset cost basis on transfer.
Aria, you said, “Wait for automatic migration, which we plan to roll out in April.”
It’s the end of April. Please update. Thank you.
Hi @peacew6
You can trigger the migration manually by enabling the Wallet-Based Cost Tracking in your settings.