Form 1099-DA: What It Means for Crypto Businesses (2026)
Quick answer: Form 1099-DA is the IRS's new information return that custodial crypto brokers — exchanges, hosted-wallet providers, and some payment processors — use to report your digital-asset sale proceeds. Brokers report 2025 gross proceeds to you and the IRS in early 2026, with cost-basis reporting phasing in for 2026 transactions. Decentralized and non-custodial platforms are not required to file.
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What is Form 1099-DA?
Form 1099-DA — "Digital Asset Proceeds From Broker Transactions" — is a new IRS information return that custodial crypto brokers use to report their customers' digital-asset sales and exchanges. It extends the broker-reporting framework that has governed stock sales (Form 1099-B) for decades to crypto, under a mandate created by the Infrastructure Investment and Jobs Act of 2021 and implemented through final regulations the Treasury and IRS released in 2024.
The practical effect: the IRS now receives a direct, third-party record of the crypto your business sold or converted on a custodial platform — the same way it already receives one when you sell a stock. That changes what you can get away with on reconciliation, and it changes what a mismatch between your books and the IRS's copy will cost you.
Most coverage of the form is written either for the brokers who have to file it or for individual investors tracking cost basis on Form 8949. This guide is written for the group in between: companies that receive crypto revenue, hold a stablecoin treasury, or pay contractors in digital assets.
Who files a 1099-DA — and who doesn't
The reporting obligation falls on custodial brokers — those that take possession of the digital assets being sold. Per the IRS final regulations, that includes:
- Operators of custodial digital-asset trading platforms (centralized exchanges)
- Certain hosted-wallet providers that custody customer keys
- Digital-asset kiosks (crypto ATMs)
- Certain processors of digital-asset payments (PDAPs) — payment processors that settle crypto on a merchant's behalf
The regulations explicitly exclude decentralized and non-custodial brokers that never take possession of the assets. A separate rule issued in December 2024 would have pulled DeFi front-ends and non-custodial platforms into 1099-DA reporting from 2027 — but Congress overturned it under the Congressional Review Act, and the President signed the repeal on April 10, 2025. So, as things stand, if you move funds through a DeFi protocol or a self-custody wallet, no 1099-DA is generated for that activity. Custodial reporting for 2025 transactions was not affected.
There are also de minimis exceptions. Brokers generally do not have to report sales of qualifying stablecoins up to an aggregate of $10,000 per customer per year, and PDAPs do not report sales of $600 or less per customer per year — they may report amounts above those thresholds on an aggregate basis instead of transaction-by-transaction, per the final regulations and the Form 1099-DA instructions.
The 1099-DA reporting timeline
The rules phase in over two tax years. Gross proceeds come first; cost basis follows a year later.
| Tax year | What brokers report | Furnish to you by | File with IRS by (e-file) |
|---|---|---|---|
| 2025 (first forms) | Gross proceeds only — no cost basis | February 17, 2026 | March 31, 2026 |
| 2026 | Gross proceeds and cost basis for covered assets acquired on/after Jan 1, 2026 | ~February 2027 | ~March 2027 |
The furnishing deadline for the first forms lands on February 17, 2026, because the usual February 15 broker date falls on a weekend followed by a federal holiday. The IRS filing deadline for e-filed forms is March 31, 2026, per the Form 1099-DA instructions.
The IRS also softened the first year. Under Notice 2024-56, brokers acting in good faith get penalty and backup-withholding relief for 2025, and Notice 2024-57 carves out several transaction types from reporting for now — wrapping and unwrapping, liquidity-provider transactions, staking, lending, short sales, and notional principal contracts. Those carve-outs matter if your treasury does any of that activity: expect gaps in what shows up on your forms.
1099-DA vs 1099-B, 1099-K, and 1099-NEC
Four different 1099s can touch a crypto-active business, and they are easy to confuse. Here is what each one actually covers.
| Form | Reports | Who issues it | When it hits a crypto business |
|---|---|---|---|
| 1099-DA | Proceeds (and later basis) from digital-asset sales/exchanges | Custodial crypto brokers | You sold or converted crypto on an exchange, kiosk, or hosted wallet |
| 1099-B | Proceeds from securities/commodities sales | Traditional brokers | Rarely — 1099-DA is the crypto equivalent |
| 1099-K | Payment-card and third-party network payments | Payment settlement entities | Some processors historically used it for crypto; 1099-DA is now the dedicated form |
| 1099-NEC | $600+ in non-employee compensation | The business that paid a contractor | You paid a contractor — including in crypto, valued at fair market value |
The one businesses mix up most is 1099-DA versus 1099-NEC. Paying a freelancer in USDT does not create a 1099-DA — it is non-employee compensation you report on a 1099-NEC at the asset's fair market value on the pay date, exactly as you would a dollar payment. We break that down in 1099 vs W-2 worker classification, and the international version — foreign contractors on W-8BEN and Form 1042-S rather than a 1099 — in our guide to 1099s for foreign contractors.
What Form 1099-DA means for your business
If your company sells or converts crypto on a custodial platform — off-ramping revenue, rebalancing a stablecoin treasury, liquidating tokens — you will start receiving 1099-DAs that report your gross proceeds to the IRS. Three consequences follow.
The gross-proceeds trap
For 2025, the form reports gross proceeds only — no cost basis. A 1099-DA that says you had $4,000,000 in proceeds does not mean you had $4,000,000 in gain; most of that is likely return of what you paid for the assets. But the IRS now has the proceeds figure, and if your return doesn't reconcile to it, that's an audit flag. The burden is on you to carry your own cost basis and report the actual gain or loss. Clean crypto bookkeeping is what closes that gap.
Reconciliation becomes mandatory, not optional
Every 1099-DA you receive needs to tie back to your own ledger: the same disposals, the same proceeds, your tracked basis, and the resulting gain or loss. Where the broker's number and your books disagree — missing transactions, transfers misread as sales, timing differences — you need a documented explanation before you file. This is standard practice in crypto accounting for business, and the forms make it non-negotiable.
Basis tracking moves to a per-wallet model
Under Revenue Procedure 2024-28, taxpayers were expected to allocate basis on a wallet-by-wallet (account-by-account) basis rather than universally across all holdings, with a safe harbor for allocating unused basis as of the start of 2025. For a business holding crypto across multiple wallets and chains, that means your records need to attribute each lot of basis to the specific account it sits in — not pool everything together.
What crypto businesses should do before 2026 filings land
- Map which platforms will issue you a 1099-DA. List every custodial exchange, hosted wallet, kiosk, and payment processor your company used in 2025, and confirm which will furnish forms and to which entity.
- Get your TIN on file with each broker. The backup-withholding relief in Notice 2024-56 for 2026 is conditioned on the broker having a TIN that matches IRS records — a missing or mismatched TIN can trigger 24% withholding on your proceeds.
- Keep a complete transaction record with cost basis. Every acquisition, disposal, transfer, and conversion — with dates, amounts, counterparties, and the wallet it happened in. This is the single thing that determines whether reconciliation takes an afternoon or a quarter.
- Separate payouts from dispositions. Paying your team or vendors in crypto is compensation reporting (1099-NEC / W-2), not 1099-DA — keep those flows and records distinct.
- Loop in a crypto-literate CPA before year-end, not after the forms arrive.
Most of the pain here is record quality. A business that runs its stablecoin payouts and conversions through one system — with every transfer, counterparty, and amount captured in one exportable ledger — walks into reconciliation with the data already assembled. That is the practical reason platforms like VaultNow keep a full transaction record and audit trail behind every payout: when a 1099-DA shows up, you have something to reconcile it against. Screening counterparties before you pay — covered in cryptocurrency address screening — keeps that same record clean on the compliance side.
Frequently asked questions
What is a 1099-DA?
Form 1099-DA, "Digital Asset Proceeds From Broker Transactions," is an IRS information return custodial crypto brokers use to report their customers' digital-asset sales and exchanges. It is the crypto counterpart to the 1099-B that stock brokers issue, created under the Infrastructure Investment and Jobs Act of 2021.
Who has to file Form 1099-DA?
Custodial brokers that take possession of the assets being sold: centralized exchanges, certain hosted-wallet providers, crypto kiosks, and certain digital-asset payment processors. Decentralized and non-custodial platforms are excluded, and the separate DeFi broker rule was repealed in April 2025.
When does Form 1099-DA take effect?
Brokers report gross proceeds for transactions on or after January 1, 2025, with the first forms furnished to recipients by February 17, 2026 and e-filed with the IRS by March 31, 2026. Cost-basis reporting phases in for covered assets acquired on or after January 1, 2026.
Is a 1099-DA the same as a 1099-B?
They serve the same purpose for different assets. 1099-B reports securities and commodities sales; 1099-DA is the dedicated form for digital-asset sales. If you traded crypto on a custodial platform, you'll receive a 1099-DA rather than a 1099-B.
What should I do if my business receives a 1099-DA?
Reconcile it against your own records. For 2025 the form shows gross proceeds only, not gain — you must apply your tracked cost basis to report the actual gain or loss, and document any difference between the broker's figure and your books before you file.
Does paying contractors in crypto generate a 1099-DA?
No. Paying a contractor in crypto is non-employee compensation, reported on a 1099-NEC at the fair market value on the payment date — not a 1099-DA. A 1099-DA is only generated when a custodial broker facilitates a sale or exchange of digital assets.
This article is educational and not tax or legal advice. Digital-asset reporting rules are changing quickly — confirm the current requirements with the IRS and a qualified tax professional before you file.
