IRS Previews Draft Form 1099-DA for Crypto Brokers Reporting on Digital Asset Transactions

The Internal Revenue Service (IRS) has unveiled a draft version of the Form 1099-DA, a new form for crypto brokers to report on the proceeds of digital asset transactions to their customers. This development comes as a result of the bipartisan Infrastructure and Investment Jobs Act signed into law by President Biden in 2021.

Under the new law, crypto exchanges and trading platforms are classified as brokers and are required to report on their customer’s gains and losses to the IRS annually, starting with the tax year 2025. Customers and the IRS will begin receiving these forms in time for the 2026 tax season. The IRS had previously issued proposed regulations on these new requirements.

Crypto brokers were expected to start tracking transactions last year, with the proposed regulations requiring brokers providing custodial services for digital assets to report adjusted basis for sales of digital assets starting in 2026. The draft form preview coincides with the highly anticipated “Bitcoin halving” event, which is expected to drive up the value of the cryptocurrency.

The draft form includes specific categories such as Unhosted Wallet Provider, Digital Asset Payment Processor, and Kiosk Operator, providing clarity on who will be expected to issue the forms and which crypto investors can expect to receive them. Other boxes on the form offer hints about how the final regulations will apply, including considerations for wash sale rules and reporting changes in control or capital structure.

Overall, the draft Form 1099-DA signals a significant shift in how digital asset transactions will be reported to the IRS, with crypto companies lobbying to limit their exposure to these new requirements. As the IRS finalizes regulations and provides further guidance, the crypto community will need to navigate these changes to ensure compliance with the law.