Millions of Americans who traded cryptocurrency through a U.S. broker during 2025 will receive a new tax form when filing season arrives next year. Form 1099-DA, created by the IRS to report digital asset proceeds from broker transactions, will be sent to both taxpayers and the agency, ending the era when many custodial crypto trades went unreported to federal tax authorities. Brokers must report gross proceeds for all digital asset sales in 2025 starting in 2026, and the IRS has already built in penalty relief for that first reporting cycle.
What is verified so far
The IRS built Form 1099-DA as a dedicated information return for digital asset proceeds from broker transactions. Brokers that qualify under Internal Revenue Code Section 6045 must furnish a copy of the form to each taxpayer and file a matching copy with the IRS. The reporting obligation traces back to the Infrastructure Investment and Jobs Act, which expanded the definition of “broker” and required third-party reporting for crypto dispositions in the same way stock and bond sales have long been reported on Form 1099-B.
The form is generally proceeds-focused, meaning it captures the gross amount a seller received rather than net gain or loss. Cost basis reporting faces real constraints for many 2025 transactions because brokers often lack reliable records of when and at what price a customer originally acquired a given token, especially if the asset was transferred in from an external wallet or another exchange. Final regulations published at 89 FR 56480 address those custody and transfer limitations, effectively deferring full basis reporting for certain transaction types while the IRS and industry work through data gaps.
The Treasury Department confirmed that brokers must begin reporting gross proceeds in 2026 for all 2025 sales. The IRS, recognizing the operational lift this places on platforms, is granting good-faith penalty relief for calendar year 2025 transactions reported in 2026. That relief shields brokers from penalties if they can show reasonable efforts to comply, even when their filings contain errors. The agency has emphasized that the relief is temporary and does not excuse brokers from building long-term systems capable of capturing digital asset trades with the same rigor seen in traditional securities markets.
What remains uncertain
Several questions remain open. No public data exists on how many brokers have completed the technical work needed to generate accurate 1099-DA forms at scale. Error rates for the first wave of filings are unknown, and the IRS has not disclosed specific enforcement priorities or audit selection criteria tied to the new form. The good-faith penalty relief signals the agency expects imperfect data in the early cycle, but the boundaries of that relief have not been tested, and it is unclear how the IRS will treat brokers whose implementation lags behind peers.
Basis reporting presents the sharpest gap. When a taxpayer moves Bitcoin from a personal wallet to a centralized platform and then sells it, the broker may have no record of the original purchase price. In that scenario, the 1099-DA will show gross proceeds, but the cost basis box could be blank or incomplete. Taxpayers in that situation will need to supply their own records to calculate gain or loss correctly, relying on exchange histories, wallet logs, or other documentation that predates the transfer. The IRS has acknowledged these custody and transfer limitations in its guidance, yet no official data quantifies how many accounts are affected or how often missing basis information will lead to discrepancies between taxpayer returns and information the agency receives.
Another unresolved issue is how consistently brokers will classify different types of digital asset activity. The form is designed around sales and dispositions, but many platforms also support staking rewards, airdrops, liquidity pool tokens, and non-fungible tokens. Some of those items may fall outside the immediate 1099-DA scope or be reported on different forms, raising the risk that taxpayers will see fragmented reporting that does not map cleanly onto their overall crypto activity. Without standardized industry practices, two brokers could treat similar transactions differently, complicating tax preparation and increasing the odds of mismatched data.
Taxpayer behavior is also an unknown. Historically, the presence of a third-party information return tends to increase voluntary compliance, because both the taxpayer and the IRS see the same numbers. With Form 1099-DA, more individuals who casually traded crypto may realize for the first time that their activity is visible to the government and must be reported on their returns. At the same time, incomplete basis fields could prompt a wave of notices when the IRS systems compare reported proceeds to the income shown on a return and flag apparent understatements.
For now, taxpayers who expect to receive a 1099-DA can prepare by organizing transaction histories, especially for assets moved between wallets or exchanges. Brokers, meanwhile, face a compressed timeline to refine their data pipelines, reconcile on-chain movements with customer accounts, and train support staff to explain the new form. The first filing season with Form 1099-DA will likely be messy, but it marks a clear shift toward treating digital assets more like traditional financial instruments in the eyes of federal tax authorities.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
