Digital Asset Tax Reporting Just Got Real

The IRS has introduced a new form called Form 1099-DA to track and report gross proceeds from digital asset sales on behalf of customers. This change affects digital asset brokers, exchanges, certain custodial wallet providers, and some payment processors starting with the 2025 tax year.

Businesses that qualify as 'brokers' under the final regulations will now carry the same reporting burden as traditional securities brokerages, except built on infrastructure most crypto-native companies never had to think about before.

A key challenge lies in cost basis reporting. If an exchange can only report the cost basis it actually knows, and if you transferred assets from another platform or wallet, the exchange may have no record of what you originally paid for them. In this case, the cost basis field on your 1099-DA may be left blank.

This does not mean the obligation goes away; instead, the burden shifts entirely to the individual or business to calculate and report the correct original cost basis themselves using their own records.