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 new tax form introduced by the Internal Revenue Service (IRS) that requires brokers—including digital asset trading platforms, payment processors, and hosted wallet providers— to report information regarding digital asset transactions, such as cryptocurrencies and non-fungible tokens (NFTs). This reporting applies to transactions occurring on or after January 1, 2025, with forms to be furnished to taxpayers and filed with the IRS beginning in early 2026.  

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 update, 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 IRS's broader effort to increase transparency in the digital asset economy and ensure compliance with tax reporting obligations. 

Who needs to report? 

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, brokers and other reporting entities are required to report the following information: 

• Gross proceeds: Beginning in 2025, brokers must report the gross proceeds from the sale, exchange, or other disposition of digital assets. This includes also the value of any non-cash property or services exchanged in the transaction. 
• Transaction details: Each reportable transaction must include key details such as the date of the transaction, the type and quantity of the digital asset, and the amount of any tax withheld. These details enable the IRS to match reported transactions with taxpayer returns. 
• Cost basis: Starting January 1, 2026, brokers will be required to report the cost basis of digital assets—that is, the original value of the asset for tax purposes. Reports must also include the date of acquisition and indicate whether the assets were transferred into the custody of the reporting Digital Asset Broker. 

Except for certain specified Stablecoins and NFTs, each transaction must be reported on a separate Form 1099-DA.  

These details help ensure accurate reporting and calculation of capital gains or losses from digital asset transactions. 

Preparing for 1099-DA: How do reporting entities need to report?  

To comply with IRS requirements for reporting digital asset transactions, reporting entities should adhere to the following steps: 

• Complete Form 1099-DA: Fill out the form with required details, including gross proceeds, transaction dates, and customer identification information. 
• Provide copies to recipients: Distribute copies of 1099-DA Form to recipients by February 17, 2026. 
• File with the IRS: Submit the completed Form 1099-DA to the IRS by February 28, 2026, if filing on paper;  or by March 31, 2026, if filing electronically. 

By understanding the definition of a broker, the types of transactions that must be reported, and these practical steps, reporting entities can ensure compliance with IRS requirements and facilitate accurate reporting of digital asset transactions. 

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.