Form 1099-DA: What Crypto Holders Need to Know

If you hold cryptocurrency, a form arrived in your mail or inbox this year that has never existed before: Form 1099-DA, Digital Asset Proceeds From Broker Transactions. 2025 was the first year brokers had to file it, and statements were due to taxpayers by 17 February 2026.

Most people who received one assumed it worked like the 1099-B they get from a stock brokerage. It does not, and that assumption is the single most expensive mistake being made with this form right now.

What Form 1099-DA actually reports

The form reports the gross proceeds from your digital asset sales and exchanges — what the transaction was worth when you disposed of the asset. Your broker files a copy with the IRS and sends you a statement.

What it generally does not report, for the 2025 tax year, is your cost basis. The IRS has said plainly that most 2025 statements will not carry basis information at all.

Why the missing basis matters so much

Your taxable gain is proceeds minus basis. If the IRS receives a form saying you disposed of $180,000 of digital assets, and nothing on that form establishes what you paid, the starting assumption on the other side of that transaction is not favourable to you.

You have to calculate and substantiate basis yourself. That means:

• Purchase records for every lot, including the date and the dollar value at acquisition
• Transfer history between exchanges and wallets, because moving an asset does not reset its basis but does break the paper trail
• A consistent identification method applied across the whole year, not chosen retrospectively per transaction
• Records for assets acquired before broker reporting existed, which no exchange will reconstruct for you

If you have moved assets between platforms over several years, this is genuinely difficult work, and it does not get easier by waiting.

What changes for 2026 transactions

Basis reporting begins for transactions effected on or after 1 January 2026. From that point brokers must report basis on covered transactions, and the form starts behaving more like the 1099-B you are used to.

That creates a two-speed problem. Assets you bought and sold entirely within 2026 through one broker will largely take care of themselves. Anything bought earlier, or moved between platforms, still depends on your own records.

Transition relief — and who it protects

The IRS provided relief while the system beds in:

• For 2025 transactions, no penalties for brokers who made good-faith efforts to comply, and backup withholding obligations were waived entirely
• For 2026 transactions, backup withholding relief continues where the broker obtains your TIN, submits it to the IRS matching programme and gets a valid name-TIN confirmation

Read that carefully: the relief protects brokers from filing penalties. It does not relieve you of reporting your gains correctly. A broker who files a good-faith but incomplete form has met their obligation; you still have to file a right return.

What is not covered at all

This is where people get caught. The final regulations do not cover so-called decentralized or non-custodial brokers — platforms that never take possession of the assets being traded. Treasury and the IRS have said rules for those will come in a separate set of regulations.

Some foreign platforms are also outside the requirement.

So activity on a DeFi protocol or certain offshore exchanges may generate no form at all. That is not the same as it being untaxed. Your obligation to report a taxable disposition does not depend on whether anyone sent you paperwork about it. The absence of a 1099-DA is a records problem for you, not an exemption.

How this lands for a contractor

Most of our clients run construction businesses and hold digital assets personally, which creates three specific issues:

• Entity separation. If crypto was bought with company funds, you have a distribution or a loan to document, on top of the digital asset question itself. Two problems, not one.
• Paying subs or vendors in crypto. That is a disposition by you at fair market value, and a payment requiring information reporting. Both sides need handling.
• Estimated payments. A large realised gain in a quarter where the business also had a strong month can push you into an underpayment penalty that neither event would have caused alone.

What to do now

• Reconcile every 1099-DA you received against your own records before it goes anywhere near a return. Do not assume the proceeds figure is right.
• Build the basis file for pre-2026 holdings now, while exchanges still have exportable history and you still remember what you did.
• Account for platforms that sent nothing. Missing paperwork does not mean missing income.
• Pick an identification method and apply it consistently across the year.
• Do not let a matching notice be the first time you look at this. The IRS now receives proceeds data it never had before, and matching notices follow data.

The short version

Form 1099-DA tells the IRS what you sold. For 2025 it mostly does not tell them, or you, what you paid. Basis reporting begins with 2026 transactions, but everything acquired before that remains your responsibility to prove.

The people who will have trouble are not the ones who traded a lot. They are the ones who traded across several platforms over several years and never kept the records.

General information about how these rules work, not advice for your situation. Digital asset reporting is still being phased in and further regulations are expected. Talk to a CPA before acting on it.

Disclaimer: This content is provided for educational purposes only and is not legal, tax, accounting, or financial advice. Every situation is unique, so consult your own attorney, CPA, or financial advisor before making decisions based on this information.