Form 1099-DA, Digital Asset Proceeds From Broker Transactions

What is Form 1099-DA? 

Form 1099-DA, Digital Asset Proceeds From Broker Transactions, is the official tax form finalized by the Internal Revenue Service (IRS) that requires custodial digital asset brokers to report information regarding digital asset transactions, such as cryptocurrencies and non-fungible tokens (NFTs). 

According to the IRS, the purpose of Form 1099-DA is to "provide more clarity for taxpayers and give them another tool to help them accurately report their digital asset transactions." Prior to this regulatory regime, digital asset reporting was largely dependent on self-reported data, which frequently resulted in inconsistencies and underreporting. The form is designed to improve the accuracy and compliance of tax reporting for digital asset transactions, supporting the IRS's broader effort to increase transparency in the digital asset economy and ensure compliance with federal tax obligations.

What is the implementation timeline for IRS Form 1099-DA?

IRS Form 1099-DA is being rolled out on a phased implementation timeline to give digital asset brokers and taxpayers time to adjust to the new reporting requirements:

• Tax Year 2025 (Reporting in Early 2026): Brokers are required to report gross proceeds only for transactions occurring on or after January 1, 2025. 
• Tax Year 2026 (Reporting in Early 2027): Mandatory cost basis and acquisition date reporting begins for "covered" digital assets (assets acquired on or after January 1, 2026, and held in custody).

Who must file Form 1099-DA? 

Effective for transactions in 2025, businesses that meet the definition of a Digital Asset Broker must file Form 1099-DA with the IRS to report specified digital asset activity. According to the final IRS regulation, a Digital Asset Broker is defined broadly as: 

‘A Digital Asset Broker is any person or organization that actively facilitates digital asset transactions for customers and has access to or verifies the identity of the counterparties involved.’ 

The IRS emphasizes that brokers are those ‘in a position to know’ the identities of counterparties that are involved in digital asset transactions.  

The following types of business operations and platforms are most likely to fall within the scope of the broker definition and be required to file 1099-DA: 

• Digital asset payment processors (PDAPs): Businesses that facilitate payments using digital assets. A PDAP affects a sale, and therefore has an obligation to report, if the PDAP knows or ordinarily would know both the nature of the transaction (to determine if it is a reportable transaction) and the gross proceeds from the transaction.  
• Hosted wallet providers: Businesses that provide digital asset wallets to parties, where they control the private keys and have the ability to verify user identities, are considered brokers. Their control over assets and access to customer information place them within the reporting requirements. 
• Digital asset exchanges: These include custodial and certain non-custodial platform providers that facilitate and execute digital asset transactions for their customers. If these platforms are in a position to know the identities of the parties involved and actively participate in transaction execution, they are subject to 1099-DA reporting.

What needs to be reported under Form 1099-DA? 

Under Form 1099-DA, brokers and other reporting entities are required to report the following information: 

• Gross proceeds: For reportable transactions occurring on or after January 1, 2025, brokers must report the gross proceeds from the sale, exchange, or other disposition of digital assets. This includes the fair market value of any non-cash property, services, or other digital assets exchanged in the transaction (such as in crypto-to-crypto swaps).
• Transaction details: Each reportable transaction must include key technical and administrative details. This includes the transaction date and time, the specific type and quantity of the digital asset, and the amount of any federal tax withheld. These details enable the IRS to match reported transaction data directly with taxpayer returns.
• Cost basis (for Covered Assets): For digital assets acquired on or after January 1, 2026, designated as "covered" assets, brokers must report the asset’s cost basis (i.e., its original value for tax purposes) and the corresponding acquisition date.

Beyond core financial data, full compliance requires a range of supporting system-level metrics. These include standardized Digital Token Identifiers (DTIs) and platform transfer indicators, among other metrics, which provide the IRS with a complete, end-to-end audit trail.

How can Regnology support brokers in fulfilling their 1099-DA reporting obligation?  

Regnology Tax Hub offers a comprehensive solution for tax reporting that encompasses Form 1099-DA requirements. The platform enables digital asset brokers to calculate cost basis, generate client-ready PDF forms, and submit bulk electronic reports directly to the IRS using advanced machine-to-machine capabilities.

Regnology has decades of experience calculating and delivering Capital Gains and Cost Basis Reporting for TradFi, both in the United States and in more than 20 other countries. Leveraging proven technology and extensive experience, Regnology ensures accurate and efficient tax reporting for brokers.

Equipping your organization for what’s next

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