As I understand it (I’m not an accountant nor attorney): It means that each wallet and/or custodian now independently tracks cost basis for calculation gain/loss when selling. Previously, one could treat all of one’s wallets collectively. The purpose of the “Safe Harbor” is for people who were using this kind of multi-wallet accounting to declare the cost basis for each wallet/custodian. Resetting, effectively, for the new tax year, since it would be difficulty or impossible to reconcile the old method with the new requirements.