IRS Broadens Crypto Tax Reporting Requirements

The Internal Revenue Service (IRS) is expanding its oversight of digital asset transactions by requiring brokers to issue Form 1099-DA for crypto activity starting January 1, 2025.

This change will increase government visibility into gross proceeds from broker-handled crypto activity and raise compliance risk for U.S. investors.

A study published in the Review of Accounting Studies estimates that only 32% to 56% of U.S. taxpayers with crypto holdings currently report their transactions, highlighting underreporting risks.

The lack of automatic cost basis and holding period reporting in crypto, combined with complex transaction types and frequent transfers, significantly increases compliance burden for active traders.