Crypto Tax Reporting Requirements: 1099-DA Form is Here

After four years of planning, the IRS has finalized its crypto tax reporting regulations. Beginning with the 2025 tax year, custodial cryptocurrency platforms will be required to report certain taxable crypto transactions directly to the IRS.

These new rules significantly change how crypto activity is tracked and reported, making it easier for the IRS—and taxpayers—to calculate gains and losses.

New Crypto Tax Reporting Requirements for Brokers

This reporting obligation applies to “digital asset brokers” that take custody of customers’ digital assets when they are sold or exchanged. These brokers include:

• Operators of centralized trading platforms such as Coinbase, Kraken, and Binance
• Hosted wallet providers, also known as custodial wallets

Because most crypto transactions flow through these types of platforms, the new reporting rules will affect a large portion of crypto users.

Introduction of IRS Form 1099-DA

To comply with the new regulations, brokers must file IRS Form 1099-DA, Digital Asset Proceeds From Broker Transactions. This form will report the following information:

• The customer’s name, address, and taxpayer identification number
• The name and quantity of the digital asset sold
• The date of sale
• The gross proceeds from the transaction

Brokers must file the first Forms 1099-DA for the 2025 tax year by March 31, 2026.

Gross Proceeds Reporting in 2025

For the 2025 tax year only, brokers are required to report gross proceeds from sales or other transfers. Gross proceeds represent the total amount received from a crypto sale or exchange before fees or other costs are deducted.

Beginning in 2026, brokers will also be required to report the customer’s cost basis, which includes the original acquisition value of the crypto plus any associated costs.

With Form 1099-DA in place, taxpayers should find it easier to calculate crypto gains and losses when filing their returns.

New Rules for Determining Cost Basis

The regulations also establish standardized rules for determining the cost basis of crypto assets. FIFO (first in, first out) is the default method. Under FIFO, the earliest acquired units are treated as sold first. During periods of rising prices, this method often results in higher taxable gains.

To potentially reduce taxes, taxpayers may instead use the specific identification method, which allows them to identify the exact units being transferred. Transitional rules for 2025 allow taxpayers to use specific identification in their own records without notifying their broker.

Wallet-by-Wallet Basis Tracking Requirement

The final regulations also require crypto owners to track basis on a wallet-by-wallet and exchange-by-exchange basis. Taxpayers may no longer treat all crypto holdings as if they exist in a single account.

If you held crypto across multiple wallets or exchanges on January 1, 2025, you must allocate your unused basis to the specific accounts where each asset is held.

Next Steps

If you would like to discuss how these new crypto tax reporting rules may affect you, please contact TrueBlaze today. We help small business owners navigate the tax code with clarity and confidence.