Form 1099-DA: What Crypto Investors and Exchanges Need to Know About the IRS's New Digital Asset Tax Form

If you bought, sold, or traded crypto on a centralized exchange in 2025, expect a new piece of mail this year — and the IRS will be getting a copy. Form 1099-DA, the brand-new information return for digital asset broker transactions, is being issued for the very first time during the 2026 filing season. For more than a decade, crypto traders operated in an information-reporting gray zone where exchanges sent inconsistent paperwork (or none at all) and the IRS relied on subpoenas, John Doe summonses, and the dreaded "Did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?" question on Form 1040. That era ends now.

This guide walks through what Form 1099-DA is, who has to issue it, what gets reported, the cost-basis rules that change again on January 1, 2026, the DeFi carve-out that survived a congressional fight, and what you should actually do when one of these forms shows up in your inbox.

What Form 1099-DA Is and Why It Exists

Form 1099-DA — "Digital Asset Proceeds From Broker Transactions" — is the IRS's new dedicated information return for sales and exchanges of cryptocurrency, stablecoins, NFTs, and other digital assets when those transactions are routed through a broker. It was created under the Infrastructure Investment and Jobs Act of 2021, which extended the existing broker reporting framework (the Form 1099-B world that stockbrokers have lived in for years) to digital assets.

The basic structure is familiar to anyone who has ever received a 1099-B from a stock brokerage: the broker tells you and the IRS what you sold, what you received, and — eventually — what you paid. The IRS then runs automated matching to flag taxpayers whose returns don't line up with the third-party data.

What makes 1099-DA significant is not the form itself but the visibility it gives the IRS. Before 2025, the agency had to piece together crypto activity from voluntary disclosures, exchange responses to subpoenas, and on-chain analytics. Starting now, custodial brokers report directly. That changes the audit math for anyone who has been casual about crypto records.

Who Has to File: The "Broker" Definition

The final regulations define a digital asset broker broadly enough to capture most platforms ordinary users interact with, but narrowly enough to exclude pure software and protocol-level activity. The forms must be issued by:

Centralized crypto exchanges that custody user assets and execute trades (Coinbase, Kraken, Gemini, and similar)
Hosted wallet providers that hold private keys on behalf of customers
Crypto payment processors that convert digital assets to fiat for merchants
Certain digital asset kiosks (Bitcoin ATMs that take possession of the asset during a transaction)
Real estate transactions where a digital asset is used as consideration, reported by the closing agent

The common thread is custody. If a platform takes possession of, or has direct control over, a customer's digital assets at the moment of a sale or exchange, it is a broker for 1099-DA purposes.

The DeFi Carve-Out: What Survived and What Didn't

The original Treasury regulations attempted to pull non-custodial software providers — front-end interfaces to decentralized exchanges, certain wallet software, and similar — into the broker definition. That was controversial, and Congress used the Congressional Review Act in 2025 to repeal the portion of the regulations covering "DeFi brokers" who never take custody.

The practical result: a non-custodial decentralized exchange that you connect to with your own wallet does not have to issue you a 1099-DA. Self-custody wallet software that merely signs transactions does not have to issue you a 1099-DA. Atomic on-chain swaps between two self-custodied parties generate no broker form.

This is a meaningful gap. The IRS gets visibility into the on-ramps and off-ramps where most retail users transact, but activity that stays inside the self-custody ecosystem still relies on voluntary taxpayer reporting. Don't read this as a free pass — the transactions are still taxable, and on-chain forensics is increasingly capable. But the paperwork follows custody.

What Gets Reported, and the 2025 vs. 2026 Difference

Here's where the timeline matters. The reporting requirements phase in over two years:

Tax year 2025 (forms issued in early 2026): Brokers must report gross proceeds only. The form shows what you received in each sale or exchange but generally leaves the cost basis box blank. You — and your tax software — are responsible for matching proceeds to your own records and computing gain or loss.

Tax year 2026 (forms issued in early 2027): Brokers must also report adjusted cost basis for "covered" digital assets — assets that were both acquired and disposed of in the same broker account. This is the big change. For covered assets, the form will look much more like a traditional 1099-B, with proceeds, basis, holding period, and gain/loss all computed by the broker.

For "non-covered" assets — anything you transferred into the broker from somewhere else, or acquired before the basis rules took effect — basis reporting remains your responsibility even on 2026 transactions.

Key Dates for the 2026 Filing Season

The filing calendar tracks the standard 1099 information return rhythm:

February 17, 2026 — Brokers must furnish copies of Form 1099-DA to recipients (taxpayers)
February 28, 2026 — Paper filing deadline with the IRS
March 31, 2026 — Electronic filing deadline with the IRS

If you have a 2025 crypto account at any major exchange, you should already have received your form or be checking your account's tax documents section. Exchanges typically post electronic copies in the user account before mailing physical forms.

The Wallet-by-Wallet Basis Tracking Shift

Buried inside the 1099-DA rollout is a change that affects every crypto investor, not just those who get a form: the IRS is forcing a shift from "universal" basis tracking (treating all your holdings of a given coin as one big pool) to wallet-by-wallet tracking (computing basis and gain/loss separately for each account and wallet).

Revenue Procedure 2024-28 provided a one-time safe harbor for taxpayers to reallocate basis between wallets without penalty, but that window closed on January 1, 2025. Going forward, when you sell ETH from Account A, the basis you use must be the basis of an ETH lot actually held in Account A — you cannot pull from a lot sitting in Account B.

For taxpayers with assets spread across multiple exchanges, hardware wallets, and DeFi positions, this means the brokers' 1099-DA basis numbers (when they arrive in 2027) will only be correct if your historical basis records are properly partitioned by wallet. Most casual crypto holders never did this, which sets up the next section.

Why the 1099-DA Numbers Won't Match Your Records (and What to Do About It)

Brokers in their first year of issuance are going to make mistakes, and even when they don't, the data they have is structurally incomplete. Expect mismatches in several common scenarios:

Transfers in from another platform. When you moved BTC into Exchange X from Wallet Y, Exchange X has no way to know what you paid for it. Its 1099-DA will show your proceeds when you sell but no basis. You must supply the basis from your own records.
Like-kind disagreements on identification method. If you didn't make a specific-identification election within the broker's system, the broker will default to FIFO. If your records use a different method (HIFO, LIFO, or specific-ID), the numbers won't line up.
Staking rewards, airdrops, and forks. These are ordinary income at receipt, with the fair market value at receipt becoming your basis. Brokers may report the disposal of these tokens later without correctly capturing the income event that gave them basis.
NFT and complex transaction handling. Wrapping, bridging, and DeFi positions opened from inside a broker account can produce edge cases the broker's reporting system was never designed for.

The IRS has acknowledged the transition is bumpy. For 2025 transactions, brokers get penalty relief for good-faith errors, and backup withholding (the 24 percent automatic deduction that normally applies when 1099 information is incomplete) is deferred through 2026. Notice 2025-33 extended these reliefs to give the industry time to stabilize.

That relief protects brokers from penalties. It does not protect taxpayers from owing the correct tax. If your 1099-DA understates basis, you'll overpay. If it overstates basis, you'll get a CP2000 notice next year.

The Practical Reconciliation Checklist

When the form arrives, do not file directly from it. Treat it as the broker's view of part of the picture and reconcile it to your own records. Here is a working checklist:

Pull every transaction from every exchange and wallet you used in 2025. Most exchanges offer CSV exports. For on-chain activity, a block explorer or crypto tax tool can produce a transaction log.
Match the 1099-DA proceeds to your records line by line. Quantity, date, and sale proceeds should agree. Flag discrepancies.
Verify basis on every disposition. If the form shows no basis, supply it from acquisition records — including the date acquired, which determines short-term vs. long-term treatment.
Check the identification method. If you intend to use specific-identification or HIFO, you generally need to have made that election before or at the time of the sale. Retroactive changes are limited.
Document transfers in and out. A transfer between your own wallets is not a taxable event, but exchanges may erroneously flag it as one. Keep transfer records to rebut any incorrect basis on the form.
Reconcile income events separately. Staking, mining, airdrops, and DeFi yield are ordinary income, not capital transactions, and may or may not appear on the 1099-DA.
File Form 8949 and Schedule D. Even with a 1099-DA, capital gains and losses go on Form 8949. Use the appropriate box (A, B, D, or E) based on whether basis was reported to the IRS.

If the broker's form is genuinely wrong, request a corrected 1099-DA before filing. If you can't get one in time, file with the correct figures and attach a statement explaining the adjustment.

Common Mistakes to Avoid

Three pitfalls show up over and over in the first year of any new information return, and 1099-DA will be no exception:

Treating gross proceeds as net income. Proceeds are not gain. A $50,000 BTC sale at a $48,000 basis is a $2,000 gain, not a $50,000 anything. Self-prepared returns sometimes carry the proceeds figure to the wrong line.
Ignoring transferred-in assets. If you brought crypto into Exchange X from elsewhere and Exchange X reports zero basis, you cannot just accept the zero. Supply your real basis.
Forgetting about the digital asset question on Form 1040. It is still there, and the threshold for answering "yes" remains broad. Receipt or disposition of any digital asset in 2025 triggers it.

Keep Your Crypto Records Audit-Ready from Day One

Form 1099-DA does not replace your obligation to keep your own crypto records — it intensifies it. With third-party information now flowing to the IRS, automated matching will catch every discrepancy between what your broker reports and what you put on your return. Reconciliation is no longer a recommendation; it's a survival skill.

This is where plain-text accounting earns its keep. Beancount.io lets you track every crypto acquisition, disposal, transfer, staking reward, and basis lot in version-controlled, auditable plain text — exactly the kind of records you'll want when a 1099-DA arrives with surprises. Your data lives in files you can read, diff, and back up forever, without depending on any single exchange or vendor. Get started for free and build the audit trail before the IRS asks for it.

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