The long‑delayed digital asset broker reporting regime is — finally — landing. For transactions on or after January 1, 2025, custodial brokers (Coinbase, Kraken, Gemini, and the rest) must issue the new Form 1099‑DA to customers and the IRS. Gross proceeds reporting applies to 2025. Basis reporting begins for assets acquired in 2026.
Broker reporting, finally
For most clients this is the first time a federal agency has been handed a clean record of their on‑exchange crypto activity. Expect the obvious consequence: automated matching letters in 2027 and beyond for anyone whose return does not reconcile to the 1099‑DA total.
What the 1099‑DA does not cover:
- DeFi protocols (Uniswap, Aave, etc.) — the Biden‑era DeFi broker rule was repealed in April 2025.
- Self‑custody wallets — transfers out of an exchange disappear from the reporting trail.
- Peer‑to‑peer transactions.
- Staking rewards, airdrops, and hard fork income — still reported as ordinary income on the taxpayer's own schedules.
Cost basis is still your problem
Because 2025 is gross proceeds only, the IRS will see what you sold for but not what you paid. The burden of establishing basis sits with the taxpayer. We continue to see three failure modes:
- Lost exchanges. Positions acquired on platforms that have since shut down (FTX, Voyager, Celsius) often have no downloadable history.
- Cross‑exchange transfers. A coin bought on Coinbase, moved to a wallet, then sold on Kraken looks — to Kraken — like a zero‑basis asset.
- Wallet‑to‑wallet mixing. Commingled wallets make specific‑identification under Treas. Reg. §1.1012‑1(j) effectively impossible after the fact.
No wash‑sale rule, yet
Despite repeated proposals, §1091 still does not apply to digital assets. Selling Bitcoin at a loss and rebuying it ten minutes later remains a recognized loss. This is a planning window, not a permanent state. Several 2024–2025 bills would close it; any of them could be tacked onto a larger vehicle in 2026.
What to do now
Three items for anyone holding crypto above a token amount:
- Pick a method and document it. Before January 1, 2026, record whether you are using FIFO, HIFO, or specific identification on a per‑wallet basis. Do it in writing, date it, and keep it.
- Pull records now. Exports from exchanges, wallet CSVs, and transaction IDs. The cost to reconstruct basis in 2030 is an order of magnitude higher than doing it now.
- Harvest losses deliberately. While the wash‑sale rule is silent, year‑end loss harvesting on depreciated positions remains one of the cleanest moves in the code.
If you are a high‑frequency trader, a founder with token compensation, or a fund with staking income, the 1099‑DA will not look like your internal ledger. Plan for reconciliation, not a match.