The Internal Revenue Service and the Treasury Department issued a set of
The IRS and the Treasury said the proposed regulations recognize the inherent electronic nature of digital asset transactions and would reduce burdens on both brokers and their customers. The proposed regulations would give brokers an alternative, optional process for obtaining consent from their customers to receive 1099-DA statements electronically without having to offer them the choice of receiving the 1099-DA statements on paper. Under this process, brokers would not have to provide customers with the ability to withdraw a previously provided consent to receiving the 1099-DA statements in an electronic format.
However, the proposed rules would require crypto brokers to meet certain enhanced electronic notice and delivery requirements and to provide customer access to the statements. Brokers would need to ensure that customers are made aware that an important tax return document has been furnished in an electronic format and that they have continuing access to their 1099-DA statements.
Under the current rules, brokers of digital assets are required to provide
The Treasury and the IRS said they acknowledge that the cost of printing and mailing paper 1099-DA statements may be unnecessarily burdensome for brokers due to the large number of digital asset transactions that some customers engage in each year. They're able to offer relief for brokers because digital asset customers almost exclusively conduct transactions electronically.
Digital assets include, for example, certain convertible virtual currencies and cryptocurrency, as well as stablecoins and non-fungible tokens.
In conjunction with the proposed regulations, the Treasury and the IRS today also issued
Crypto brokers have been lobbying heavily in Washington to make the new 1099-DA reporting process easier to use. Crypto brokers began
"We have a broad population so I've spent a lot of time in Washington describing who our population is," said Lawrence Zlatkin, vice president of tax at Coinbase, ahead of the release of the proposed regulations. "We have millions of users on our platform, and I like to divide them into three buckets. They all receive the same form. The form is required to be disclosed to everyone who's a U.S.-based customer. We have large institutional users on our platform and name brands. We're one of the largest custodians of crypto in the world, so we send it to them."
Most of those large institutional customers have their own systems for tracking crypto transactions and their gains and losses. However, individual crypto investors probably don't have systems of their own for tracking their crypto trades. "The other end of the spectrum is our small retail population in the millions, many of whom may engage in small scale transactions and also may engage in what we call USDC stablecoin transactions. They're also receiving this form."
He sees the form as analogous to the older Form 1099-B, which users who participate in traditional finance receive from brokers for the disposition, sale or exchange of traditional securities. "One of the great advantages and great success stories of crypto is that it actually is very democratic, so it reaches into a larger subset of the population," said Zlatkin. "These people may not be as familiar with how that works, so they're getting it for the first time, and they may have more questions than others."
The other group is the active crypto traders who have large volumes of activity. "They're also receiving it, and it's quite voluminous for them," said Zlatkin. "They're the ones who probably have the most questions because they also have probably the most gain or loss to be reported."
However, he noted that crypto brokers weren't required to report the cost basis for transactions in 2025. That requirement only started for transactions on or after Jan. 1, 2026. "One of the missing links in any of this is basis information," said Zlatkin. "We're not actually providing basis in 2024 and 2025 transactions, because there's no requirement to do so under the current rules. All we're doing is we're sending gross proceeds to the government. That in itself creates confusion and potential overreach by the government. And people are concerned if the government only gets gross proceeds. Are they going to send me a letter saying, Why did you report all of those gains and the basis? I Probably the most complicated issue actually is calculating gain or loss with correct basis information, something that we're genuinely trying to address as best we can."
