1. Yes. If you received interest income from lending cryptocurrency, this income would be reported as interest income and would be taxed as ordinary income and not as a capital gain.
2. If you sold the cryptocurrency at a loss in 2025, then it can be reported as a capital loss on your tax return. If you have not yet sold the cryptocurrency, then there would be nothing to report on your tax return for 2025.
A new form for 2025, called 1099-DA Digital Asset Proceeds from Broker Transactions" is required to be issued by brokers for sales of cryptocurrency. This information can be used to determine gains and losses from cryptocurrency sales. Because 2025 is a transition year for 1099-DA, brokers are not required to include "basis" (typically the amount of money you invested in the cryptocurrency that was sold). It is helpful to know this "basis" as this will be needed to correctly determine the gain or loss you incur on crypto sales. For years 2026 and beyond, brokers will be required to include the basis information on crypto sales, which will make tax reporting easier!
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