Yes, an exchange of one cryptocurrency for another cryptocurrency does trigger a reporting requirement. The IRS views the exchange as a sale.
So if you have ethereum and change it to bitcoin, the IRS thinks of it as you sold the ethereum and used the proceeds from that sale to buy the bitcoin - you never saw money withdrawn from your wallet, but there is still a taxable transaction. It's similar to a stock transaction, where your proceeds for the ethereum exchange becomes the basis of the new bitcoin that you are holding.
Here is an example with really over-simplified numbers:
You bought 1 unit of Ethereum for $10. That unit rises in value and you want to change to Bitcoin. When the unit is worth $30, you exchanged Ethereum directly for Bitcoin - you never saw cash, just a change of currencies in your wallet. Your gain on the "sale" of the Ethereum would be $20 ($30 less the $10 you paid.) Your basis in the new Bitcoin is $30 (what the currency was worth when you received it in exchange for the Ethereum.) If you later sell, cash out or exchange the Bitcoin, your would realize profit or loss based on the value of the coin when you acquired it.
Clarissa
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