New Crypto Tax Form Requires Tax Pros to Keep Asset Inventories

Millions of US crypto investors will encounter Form 1099-DA for the first time in the 2026 filing season for 2025 digital asset activity. For practitioners, knowing what the form includes and omits is essential, because misunderstandings can lead to returns that are incomplete or inconsistent with the taxpayer’s actual transactions.

The form reports digital asset activity on US custodial trading platforms. It functions similarly to Form 1099-B by setting standards for transactional information for both taxpayers and the IRS.

The changes will prompt taxpayers to move away from returns based entirely on their own records and toward filings shaped by broker reporting that captures only part of their activity.

New Reporting Rules

Several categories of taxable activity on custodial platforms won’t be reported on a 1099-DA. Qualifying stablecoin and specified nonfungible token transactions may be reported under optional methods. Other transactions, such as wrapping and lending, remain temporarily excluded under Notice 2024-57.

In addition, certain taxable actions, such as when a taxpayer uses digital assets to pay a third party and the broker only records a withdrawal, aren’t reported. These omissions mean that even activity occurring within a custodial exchange may not be fully reflected on Form 1099-DA.

A large portion of digital asset activity also takes place entirely outside US custodial brokers. This includes transactions involving assets held in self-custody wallets, trades routed through DeFi protocols, decentralized NFT marketplaces, and foreign exchanges. These actions all fall outside the broker reporting rules. Activity on these platforms also may affect the cost basis of assets later disposed of through a US custodial exchange.

As a result, Form 1099-DA should be viewed as one data source rather than a comprehensive record of a taxpayer’s digital asset activity.

The first year of reporting adds another layer of complexity because all 2025 dispositions are treated as noncovered, which means that brokers aren’t required to report cost basis for any of these transactions. Taxpayers may rely on their own books and records to determine their cost basis.

Some brokers may choose to display basis information on substitute statements when they have sufficient data, but that information isn’t required to be reported to the IRS and shouldn’t be assumed to be complete. Practitioners often will need to reconcile broker reporting with taxpayer records that capture off-platform activity and historical acquisition details.

These issues don’t disappear in 2026, but they change form as cost-basis reporting begins for covered assets. Covered status applies only to digital assets acquired on or after Jan. 1, 2026, and held in the same custodial account until disposition.

Transfers between platforms or into self-custody break covered status and, because transfer statements aren’t required for digital assets, brokers generally don’t receive cost basis information when assets move between accounts.

Therefore, taxpayers who transfer assets across wallets or exchanges must rely on their own books and records to preserve basis continuity.

Practitioner Guidance

The most effective approach for practitioners in the 2026 filing season is to start with a clear inventory of where a client held, transacted in, or transferred digital assets during 2025. That process begins by identifying all platforms the client used during the year, collecting Forms 1099-DA from US custodial exchanges, and separately accounting for activity involving self-custody wallets or foreign exchanges that won’t provide an information return.

Practitioners should review the client’s books and records, including crypto tax software outputs where available, to understand how and when assets were transferred and to ensure cost basis is tracked continuously across platforms. For dispositions reported on Form 1099-DA, the proceeds reported to the IRS should then be reconciled to the client’s records so that gains and losses are calculated using complete and accurate cost basis.

Regardless of the tools used, practitioners should document how Form 1099-DA transactions were matched to the client’s records before completing Form 8949. Documenting assumptions and methodology can help practitioners respond effectively if questions arise about how particular lots or transactions were matched.

Form 1099-DA ultimately will strengthen digital asset tax reporting, but its early years provide only part of the information practitioners need. Professionals who understand the form’s limitations and integrate it with a client’s broader activity will be better positioned to prepare accurate returns and support defensible reporting as the new framework takes hold.

As reporting matures in the years ahead, the interplay between broker-provided data and taxpayer records will remain an important part of digital asset compliance, and the systems practitioners establish in 2026 will shape that process for years to come.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

David Canedo is a cryptocurrency tax specialist at CoinTracker.

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