Managing cost basis and tax reporting as tokenized securities mature

As tokenized securities move from concept to reality, financial institutions face increasingly complex cost basis and tax reporting requirements. The first example of this shift is The Depository Trust & Clearing Corporation (DTCC), offering tokenization service for specific assets this summer, after receiving a No-Action Letter from the SEC on December 11, 2025.

Tokenization in capital markets

Alongside DTCC’s rollout, the market has signaled that they know they need to be ready for tokenized securities, as recent research from Broadridge notes that 84% of firms call it a “strategic importance.” With tokenized securities, firms must still maintain accurate tax lot accounting and cost basis records throughout the asset lifecycle. As adoption expands, broker-dealers, custodians, and digital asset platforms will need to determine how tokenized transactions integrate with existing gain/loss calculations, customer reporting, and IRS compliance obligations. The technology may change, but the underlying reporting requirements remain.

Ensuring tax compliance

One of the biggest tax challenges associated with tokenized securities is the application of wash sale rules. Investors and firms must accurately identify when a loss-generating transaction is offset by the purchase of an identical security, which can trigger basis and holding period adjustments. Automating these complex calculations can help firms maintain accurate cost basis records and comply with reporting requirements.

GainsKeeper is purpose-built to combine Wolters Kluwer’s deep tax expertise with scalable technology to help firms stay compliant, mitigate risk, and avoid costly penalties.  Leveraging decades of expertise in cost basis reporting and complex tax changes, the solution helps firms with this digitization shift across the board, including wash sale processing and specialized basis adjustments. It is not enough to simply add support for a new asset class – GainsKeeper is applying existing tax expertise to a new market structure. The development is driven by regulatory requirements and reporting obligations, helping firms prepare for compliance rather than reacting after the fact.

What comes next

DTCC's initiative is likely just one of several tokenization models that emerge, with others potentially coming from exchanges such as NYSE and other market participants. GainsKeeper is designed to support the underlying tax and cost basis requirements regardless of which tokenization framework gains adoption.

While tokenized securities remain in the early stages of adoption, firms that wait until trading volumes increase may face significant operational challenges. Establishing tax lot accounting, basis tracking, and reporting processes early can reduce future compliance risk and operational disruption.

Building on decades of experience supporting cost basis reporting, IRS regulatory changes, and complex tax calculations across the financial services industry, Wolters Kluwer is helping firms prepare for the next evolution of securities markets. To learn more about how GainsKeeper can be your trusted tax compliance solution for the digital asset era, visit: https://www.wolterskluwer.com/en/solutions/gainskeeper/gainskeeper-for-digital-assets