By Mike Ring | Updated June 2026
For years, the IRS’s approach to crypto reporting was, charitably, a patchwork. Exchanges sent 1099-Ks that showed gross trade volume instead of gains. Some sent 1099-Bs that were partially useful if you never moved your coins off the platform. Most sent nothing. Taxpayers self-reported — or didn’t — and the whole system relied on honor and optimism.
That era is over.
Form 1099-DA represents the first standardized information return specifically dedicated to digital asset transactions, bringing reporting requirements for digital brokers in line with those of traditional financial institutions. The 2025 tax year was its debut. The 2026 tax year is when it gets teeth. If you hold crypto on any U.S. exchange, this affects you.
Here’s what changed, what’s still being phased in, and what you actually need to do about it.
What Is Form 1099-DA?
Form 1099-DA, titled “Digital Asset Proceeds From Broker Transactions,” is the IRS information return that custodial brokers use to report the proceeds from your cryptocurrency and digital asset sales to both you and the IRS. The acronym “DA” stands explicitly for Digital Assets, capturing cryptocurrency, stablecoins, and non-fungible tokens (NFTs).
The creation of Form 1099-DA was mandated by the Infrastructure Investment and Jobs Act of 2021, which amended Internal Revenue Code Section 6045 to expand the definition of a “broker” to include persons who regularly provide services effectuating transfers of digital assets. The final regs under IRC § 6045, released in July 2024, establish the rules for the new reporting regime.
The official IRS instructions and the form itself are available at IRS.gov/Form1099DA.
How 1099-DA Differs From 1099-B
The comparison to 1099-B is the right starting point, because the two forms serve the same broad purpose: telling the IRS what you sold and what you received for it. But the differences matter.
Asset Type
Form 1099-DA reports digital assets, including cryptocurrencies and tokenized securities, while Form 1099-B reports traditional financial assets (such as stocks and bonds), barter exchanges, and certain derivatives. No exchanges will issue 1099-B for cryptocurrency under the updated IRS guidance. Platforms that deal with other assets as well as crypto, such as Robinhood or Cash App, will continue to issue 1099-B for those non-crypto assets.
Who Issues It
The form was created as part of the Infrastructure Investment and Jobs Act of 2021, which expanded the definition of “broker” to include custodial digital asset trading platforms, hosted wallet providers, digital asset kiosks (like Bitcoin ATMs), and certain processors of digital asset payments (PDAPs). That’s a much broader net than the 1099-B world, where “broker” generally meant a registered securities dealer.
The rules apply to “brokers,” a term broadly defined to include not only custodial digital asset exchanges but also certain digital asset payment processors, wallet providers, and kiosk operators that effect transactions on behalf of others.
The Cost Basis Gap — The Critical Difference
This is where it gets complicated. Stock brokers have been reporting cost basis on 1099-B for covered securities since 2011. Crypto is getting there, but on a delay.
For the 2025 tax year, brokers report gross proceeds only. Most of these statements will not include the basis for DA transactions in 2025, and taxpayers will have to calculate basis to determine their gain or loss.
Starting with transactions made on or after January 1, 2026, brokers must also report cost basis for covered digital assets — those acquired and held within the same broker account.
So for the 2026 tax year (forms mailed in early 2027), your 1099-DA should start showing both proceeds and cost basis — but only for a narrow slice of your holdings.
The Covered vs. Noncovered Problem
This is the part most taxpayers and a surprising number of tax preparers miss.
Mandatory basis reporting will be phased in, applying only to “covered securities,” a term narrowly defined as digital assets acquired on or after January 1, 2026, and held continuously in a broker’s account. Any asset acquired before that date or transferred into a broker’s platform is considered a “noncovered security,” for which brokers are not required to report basis.
Read that again. Even after the 2026 phase-in:
- Coins you bought before 2026: noncovered. Your broker won’t report basis. You’re on your own.
- Coins you bought post-2026 and left at the exchange: covered. Basis reported.
- Coins you bought post-2026 but moved to a cold wallet or bridged cross-chain: noncovered. Basis not reported.
Anyone who bought cryptocurrencies before 2026 or transferred assets off the exchange may not get complete reporting from a 1099-DA. In those cases, traders must compile their transaction history manually or use software to connect with exchange APIs and wallet addresses for full cost basis analysis.
In mixed transactions involving both covered and noncovered assets, brokers may report gain or loss only for the covered portion, while reporting gross proceeds for the full disposition. This partial reporting can create a misleading appearance of completeness if not reconciled.
That last point deserves emphasis. Your 1099-DA might look complete. It is not. If you have a mix of pre-2026 and post-2026 lots, the form will show full proceeds but only partial basis. The math will be wrong. The IRS will see the same wrong math. That’s where audits start.
For a deeper look at what happens when basis is missing and how to reconstruct it, see our pillar guide on 1099-DA missing cost basis and our cost basis recovery service page.
The Wallet-by-Wallet Rule: Another Quiet Change
Parallel to 1099-DA reporting, the IRS through Rev. Proc. 2024-28 changed how taxpayers must track basis — and it affects everyone, regardless of whether your exchange reports it for you.
The IRS, through Rev Proc 2024-28, officially disallowed the “universal method” of aggregating cost basis across all wallets. The agency now mandates a “wallet-by-wallet or account-by-account method.”
Effective January 1, 2025, this procedure mandates that taxpayers implement wallet or account-based tax lot tracking, rather than using a universal accounting method. This revenue procedure aims to ensure accurate basis tracking for crypto assets and emphasizes the importance of crypto reconciliation for compliance.
Per Notice 2025-07, starting January 1, 2026, all brokers will be required to report the basis of securities sold using a wallet-by-wallet FIFO methodology, unless the taxpayer opts for specific identification.
If you previously pooled all your BTC basis across Coinbase, Kraken, and your Ledger into one blended number, that method is now disallowed. Every wallet and every exchange account is now its own independent cost basis ledger.
What the 2026 Form Actually Reports
When 1099-DA is fully phased in — for covered assets sold in 2026 and later — here’s what brokers must include:
Form 1099-DA requires brokers to report detailed information about each digital asset transaction, including payer and recipient identification, transaction details like asset name, quantity, date, time, and gross proceeds. For covered securities, brokers must also report the cost basis, the date acquired, and the gain or loss.
The form also includes a Digital Token Identifier (DTIF) code and a wash sale indicator box — though wash sale rules (Section 1091) technically do not yet apply to pure cryptocurrencies like Bitcoin. That box is primarily for tokenized securities. However, its presence on the form suggests the IRS is building the infrastructure to enforce wash sales the moment Congress passes the legislation.
IRS Matching: The Enforcement Mechanism
This is why 1099-DA matters more than prior crypto reporting ever did.
Brokers must issue Form 1099-DA to both taxpayers and the IRS, enabling automated IRS matching and increasing the likelihood of discrepancies triggering IRS tax audit scrutiny.
In the past, exchanges often sent a Form 1099-K or nothing at all. The 1099-K was designed for credit card merchants, not investors, leading to confusing situations where the IRS mistook $10,000 in trade volume for $10,000 in income. That confusion, while annoying for taxpayers, also meant IRS matching was unreliable.
1099-DA changes that. The IRS now receives a structured, transaction-level data file directly from your exchange. They cross-reference it against your Schedule D and Form 8949. If your reported proceeds don’t match, expect a CP2000 notice.
Every taxpayer must report any related income, gains, or losses, whether they receive a Form 1099-DA or not. The form doesn’t create the tax obligation. It just makes non-compliance harder to hide.
What This Means If You’re a Multi-Wallet, Multi-Chain Trader
If you traded exclusively on one U.S. exchange and never moved your coins, 1099-DA is mostly good news — more of the heavy lifting gets done for you over time.
If you’re anyone else — multi-chain DeFi, bridging assets, hardware wallets, cross-exchange arbitrage, NFT flipping, LP positions — 1099-DA tells an incomplete story at best and a misleading one at worst. Your broker sees one slice of your activity. The IRS sees that slice. You’re responsible for the whole picture.
Receiving Form 1099-DA is not a prerequisite for reporting cryptocurrency activity. U.S. tax rules require taxpayers to report all digital asset transactions, including gains, losses, and income, regardless of whether a form is issued.
That’s the part that catches people. The 1099-DA hits their inbox, looks authoritative, and they import it into TurboTax. Missing $80k in DeFi activity and three cross-chain bridges later, they file a return that’s technically incomplete.
For more resources on navigating the 1099-DA landscape, browse our Insights hub.
FAQ
1. Do I need a 1099-DA to file my crypto taxes?
No. U.S. tax rules require taxpayers to report all digital asset transactions, including gains, losses, and income, regardless of whether a form is issued by an exchange or broker. Even in the absence of third-party reporting, taxpayers remain fully responsible for maintaining records and accurately reporting their crypto activity.
2. My 1099-DA shows huge gross proceeds. Does that mean I owe taxes on all of it?
No. Gross proceeds are the total you received from sales, not your profit. Your taxable gain is proceeds minus your cost basis. Most 1099-DA statements for 2025 will not include the basis for DA transactions, so taxpayers will have to calculate basis to determine their gain or loss. Importing just the proceeds number is a fast way to massively overstate your taxes.
3. What’s the difference between a covered and noncovered digital asset?
Beginning with all sales made after January 1, 2026, brokers will be required to report both proceeds and basis for all covered securities, with voluntary basis reporting for noncovered securities. A covered security refers to any digital asset purchased after January 1, 2026, that is held in the custody of a broker. A noncovered security includes digital assets purchased before January 1, 2026, or those not held in the broker’s custody.
4. What if I transferred coins from a hardware wallet onto an exchange and then sold them?
A noncovered digital asset is one acquired before January 1, 2026, or transferred into a broker account from an external wallet. That means even if you sold on a covered exchange in 2026, the broker won’t report your cost basis if the coins came in from an outside wallet. You need your own records — purchase date, purchase price, acquisition cost — to reconstruct basis correctly.
5. Can I still use specific identification (SpecID) for crypto after the new rules?
Per Notice 2025-07, starting January 1, 2026, all brokers will be required to report the basis of securities sold using a wallet-by-wallet FIFO methodology, unless the taxpayer opts for specific identification. SpecID remains available but requires you to communicate your lot selection to your broker or document it yourself at the time of sale. Default treatment if you don’t elect otherwise is FIFO at the wallet level.
6. Does 1099-DA cover DeFi transactions?
Currently, the 1099-DA rules apply to custodial brokers. DeFi protocols that operate without a central intermediary are a separate (and ongoing) regulatory question. The final rules explicitly delayed DeFi broker reporting while the IRS works through the technical and legal framework. If you’re trading on Uniswap or Curve or doing anything on-chain without a custodian, your activity is not captured by your exchange’s 1099-DA — and you’re still fully responsible for reporting it.
7. What happens if my 1099-DA has errors?
Brokers are filing this form for the first time and working through real data-quality problems. Transition relief under IRS Notice 2025-33 waives penalties for brokers making a good-faith effort to file correctly. That said, penalties for brokers don’t protect you from a mismatched return. If your 1099-DA is wrong, you need to reconcile it against your own records and file accurately — not just import the error. The IRS has indicated that transitional relief from penalties will be available for brokers making good-faith efforts to comply during the initial rollout. That relief runs out.
The Bottom Line
1099-DA is a structural change to how crypto activity gets reported to the IRS, not a temporary compliance blip. The 2025 filing season was the first lap. The 2026 tax year — with mandatory cost basis reporting for covered assets — is when the regime matures. And if you’re holding coins you bought before 2026, moved assets between wallets, or traded on-chain without a custodian, the 1099-DA your exchange sends you is only telling part of your story.
The IRS gets the same partial story. The discrepancy between what they see and what you actually owe — in either direction — is your problem to solve before they solve it for you.
This post is general educational information and not tax advice. Your situation will differ based on your transaction history, holding periods, and applicable rules at the time of filing. Consult a qualified tax professional before filing — or reach out to us if your 1099-DA cost basis picture has gaps.
Need help with your crypto taxes? Mike Ring and the BCTP team handle the messy stuff — multi-chain DeFi, 1099-DAs that don’t add up, prior-year amendments. Free consult at cryptotaxprep.io or call 410-216-4632.
This isn’t tax advice. Talk to a professional about your specific situation.
