1099-DA Requirements 2025: Broker Obligations & User Thresholds

Table of Contents

1. 1099-DA Requirements Overview
2. Who Must File Form 1099-DA (Broker Requirements)
3. Who Receives Form 1099-DA (User Thresholds)
4. Information Required on Form 1099-DA
5. Filing Deadlines and Timeline
6. Penalties for Non-Compliance
7. How Major Exchanges Are Preparing
8. What This Means for Crypto Users
9. FAQ: 1099-DA Requirements Questions

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1099-DA Requirements Overview

The Infrastructure Investment and Jobs Act, passed in November 2021, introduced sweeping changes to cryptocurrency tax reporting. The centerpiece is Form 1099-DA (Digital Asset Proceeds From Broker Transactions), which becomes mandatory for the 2025 tax year (forms issued in January 2026).

Key Changes from Previous System

Before 2025:

• Crypto exchanges and brokers had no mandatory reporting to IRS
• Users self-reported all crypto transactions
• IRS had limited visibility into crypto trading activity
• Only a small percentage of users accurately reported taxes

Starting 2025 (Effective January 1, 2025):

• Crypto brokers must report sales to IRS
• Users receive Form 1099-DA (like stock investors get 1099-B)
• IRS can automatically match reported sales to tax returns
• Non-compliance becomes much riskier

Legislative Authority

Form 1099-DA reporting is mandated by:

• Infrastructure Investment and Jobs Act (2021) - Original legislation
• IRS Notice 2023-10 - Proposed regulations (January 2023)
• Final Treasury Regulations - Expected finalization in 2024
• Internal Revenue Code Section 6045 - Broker reporting requirements

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Who Must File Form 1099-DA (Broker Requirements)

The law requires "brokers" to file Form 1099-DA. But what qualifies as a broker in the crypto space?

Definition of "Broker" Under New Rules

A broker is any person who, in the ordinary course of a trade or business, effects sales of digital assets on behalf of others.

This includes:

1. Centralized cryptocurrency exchanges

   • Coinbase, Kraken, Gemini, Binance.US
   • Any platform facilitating crypto trades

2. Digital asset trading platforms

   • Platforms where users trade crypto-to-crypto
   • Platforms offering fiat on/off ramps

3. Payment processors accepting crypto

   • Companies processing crypto payments for merchants
   • PayPal, Cash App (for crypto features)

4. Custodial wallet providers (proposed, not finalized)

   • Hosted wallet services that facilitate transactions
   • May include some custodial wallets

5. DeFi front-ends (highly contested, likely delayed)

   • Decentralized exchange interfaces
   • DeFi protocols with identifiable operators
   • Status: Strong industry pushback, implementation unclear

Entities NOT Required to File (as of 2025)

Exempt from broker reporting:

• Decentralized protocols without identifiable operators
• Non-custodial wallet providers (MetaMask, Ledger, Trezor)
• Hardware wallet manufacturers
• Blockchain networks themselves (Ethereum, Bitcoin, Solana)
• Peer-to-peer transactions between individuals
• Mining pools (separate reporting requirements may apply)

Special Cases

Foreign Exchanges: If a foreign exchange serves U.S. customers and meets the broker definition, they may be required to file 1099-DA for U.S. users. However, enforcement is complex and evolving.

Decentralized Exchanges (DEXs): The IRS has proposed that certain DeFi protocols could be considered brokers, but this is highly controversial and may not be enforced for 2025. Expect ongoing regulatory battles.

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Who Receives Form 1099-DA (User Thresholds)

Not every crypto user will receive a 1099-DA. The form is issued based on specific thresholds.

Primary Reporting Threshold

$600 Gross Proceeds Rule:

You will receive Form 1099-DA if your total gross proceeds from crypto sales exceed $600 during the calendar year.

Important: This is gross proceeds (total sale amount), NOT profit. Even if you lost money overall, you receive the form if sales exceeded $600.

Example:

You made 3 crypto sales in 2025:

• Sale 1: $300 proceeds
• Sale 2: $250 proceeds
• Sale 3: $150 proceeds
• Total proceeds: $700

Result: You receive Form 1099-DA (exceeds $600 threshold)

Transaction Count Threshold (Proposed)

Early proposals included a 200 transaction threshold (regardless of dollar amount), similar to 1099-K rules. Status: This may be included but is not confirmed in final regulations.

What Counts as a "Sale" for Threshold Purposes

Transactions that count toward $600 threshold:

• Selling crypto for USD/fiat
• Trading crypto-to-crypto (BTC → ETH)
• Using crypto to purchase goods/services
• Disposing of crypto in any taxable manner

Transactions that DO NOT count:

• Buying crypto with fiat (not a sale)
• Transferring crypto between your own wallets
• Receiving crypto as a gift (recipient)
• Inheriting crypto

Multiple Brokers = Multiple Forms

If you use multiple exchanges, each broker sends its own 1099-DA. You could receive 5-10 forms if you trade on multiple platforms.

Example:

Your 2025 trading activity:

• Coinbase: $8,000 in sales → 1099-DA issued
• Kraken: $3,500 in sales → 1099-DA issued
• Gemini: $400 in sales → No 1099-DA (under $600)

Result: You receive 2 separate Forms 1099-DA

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Information Required on Form 1099-DA

Form 1099-DA mirrors Form 1099-B (used for stock sales) with crypto-specific adaptations.

Required Information on the Form

Box 1: Proceeds from Digital Asset Sales

• Total gross proceeds from all reportable sales
• Reported in USD value at time of transaction

Box 2: Cost Basis (if available)

• What you paid for the crypto sold
• May be blank if broker doesn't have cost basis information
• Only includes basis for crypto acquired at that broker

Box 3: Gain or Loss

• Box 1 (proceeds) minus Box 2 (cost basis)
• May be blank if cost basis is unavailable

Box 4: Digital Asset Type

• Type of cryptocurrency sold (Bitcoin, Ethereum, etc.)
• May list "Various" if multiple types sold

Box 5: Date of Sale

• Date crypto was disposed of
• Critical for determining short-term vs long-term

Box 6: Date Acquired

• When you originally obtained the crypto
• May be blank for transferred-in crypto

Box 7: Number of Transactions

• Total count of reportable transactions

Additional Information Boxes:

• Your name, address, TIN (SSN or EIN)
• Broker's name, address, TIN
• Account number
• Any federal income tax withheld (usually $0 for crypto)

What Brokers Are NOT Required to Report

Information typically missing:

• Cost basis for crypto transferred into the exchange from external wallets
• Historical cost basis from before customer relationship began
• Gas fees and transaction costs paid outside the platform
• Transactions on other exchanges
• DeFi activity
• Peer-to-peer transactions

This is why 1099-DA often shows incomplete or $0 cost basis for many users.

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Filing Deadlines and Timeline

Timeline for 2025 Tax Year (First Implementation)

Throughout 2025 (Jan 1 - Dec 31):

• Brokers track all reportable transactions
• Real-time data collection and validation

January 31, 2026:

• Deadline for brokers to send 1099-DA to users (paper or electronic)
• Deadline for brokers to file with IRS (electronically)

February - April 15, 2026:

• Users file tax returns using 1099-DA information
• Reconcile 1099-DA with personal records
• File Form 8949 and Schedule D

Note: Extensions may apply in special circumstances, but brokers are strongly incentivized to meet January 31 deadline.

How You'll Receive Your 1099-DA

Electronic Delivery (Most Common):

• Available in your exchange account dashboard
• Email notification when ready
• PDF download

Paper Mail:

• Mailed to address on file by January 31
• Slower but still valid

Tip: Opt for electronic delivery to receive forms faster and avoid postal delays.

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Penalties for Non-Compliance

The IRS enforces 1099-DA requirements with significant penalties for brokers and users.

Broker Penalties for Non-Compliance

Failure to File with IRS:

• $310 per form if filed within 30 days late
• $630 per form if filed 30+ days late (but by August 1)
• $1,890 per form if filed after August 1 or not at all
• Maximum penalty: $7,402,500 per year (for large brokers)

Intentional Disregard:

• $630 per form (minimum)
• No maximum cap on penalties

Failure to Provide to Recipient:

• $310 per form not provided to user

Example:

A mid-sized exchange with 50,000 users fails to file any 1099-DA forms.

Penalty: 50,000 × $1,890 = $94,500,000 (if filed after August 1)

This is why exchanges take compliance very seriously.

User Penalties for Non-Reporting

If you receive a 1099-DA and don't report the income:

• 20% accuracy-related penalty on unpaid tax
• Potential audit (IRS has your 1099-DA data)
• Interest accrual from original due date

Example:

Your 1099-DA shows $50,000 in proceeds. You don't report it. IRS catches the omission.

• Actual tax owed: $12,000 (24% bracket)
• Accuracy penalty: $2,400 (20% of $12,000)
• Interest: ~$600 (accrued over 2 years)
• Total owed: $15,000+ (vs. original $12,000)

Criminal Penalties (Rare but Severe)

Tax evasion (willful non-reporting) can result in:

• Up to 5 years in prison
• Fines up to $250,000 (individuals) or $500,000 (corporations)
• Cost of prosecution

This is typically reserved for egregious cases, not honest mistakes.

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How Major Exchanges Are Preparing

Major U.S. exchanges have been preparing for 1099-DA requirements for over a year.

Coinbase Preparation

Systems in place:

• Enhanced cost basis tracking system
• Historical transaction reconciliation
• User communication campaign (FAQs, blog posts)
• Beta testing 1099-DA forms in 2024
• API updates for tax software integration

Coinbase's approach:

• Will report all sales meeting $600 threshold
• Cost basis included only for crypto bought on Coinbase
• Transferred-in crypto = $0 cost basis reported

Kraken Preparation

Systems in place:

• Updated reporting infrastructure
• Cost basis methodology documentation
• User education webinars
• Partnership with crypto tax software

Kraken's approach:

• FIFO (first-in-first-out) default for cost basis
• Users can request alternative accounting methods
• Clear disclaimers about transferred crypto

Gemini Preparation

Systems in place:

• Early implementation of tracking systems
• User notification system for reportable events
• Real-time cost basis calculations

Industry-Wide Challenges

Common issues exchanges face:

1. Transferred crypto tracking - No visibility into original purchase
2. Cross-chain bridging - Difficult to track basis across chains
3. DeFi interaction - On-chain activity not fully visible
4. Historical data gaps - Pre-2020 records may be incomplete
5. International users - Determining U.S. vs foreign status

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What This Means for Crypto Users

Increased Compliance Burden

For casual traders:

• Must reconcile 1099-DA with personal records
• Can't ignore crypto taxes anymore
• Need to track cost basis independently

For active traders:

• May receive multiple 1099-DAs from different brokers
• Must consolidate all forms on single tax return
• Higher scrutiny from IRS

The Cost Basis Problem

Critical issue: Brokers only report cost basis for crypto acquired at their platform. If you:

• Bought BTC on Coinbase, transferred to hardware wallet, then transferred to Kraken and sold
• Kraken's 1099-DA will show $0 cost basis (they don't know you paid $30,000 for it)
• IRS receives 1099-DA showing all proceeds as gain
• You must correct this on Form 8949

Why You Need Comprehensive Records

What you must track:

• All purchases across all platforms (with cost basis)
• All transfers between wallets/exchanges (with dates)
• All sales with accurate cost basis
• Gas fees paid (adjust cost basis)
• DeFi transactions (not on any 1099-DA)

This is impossible to do manually for active traders, which is why crypto tax software is now essential.

Silver Lining: Potential Refunds

Many users overreport crypto gains because they:

• Don't track cost basis properly
• Forget about losing trades
• Miss deductible expenses

With accurate 1099-DA reconciliation, you may discover:

• Lower actual gains than estimated
• Unrealized losses you can harvest
• Overpaid taxes from prior years (amend possible)

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FAQ: 1099-DA Requirements Questions

1. Is Form 1099-DA mandatory for 2025?

Yes. Form 1099-DA reporting is mandatory starting January 1, 2025 for the 2025 tax year. Brokers must issue forms by January 31, 2026.

2. What if I only traded $400 worth of crypto in 2025?

If your gross proceeds are under $600, your broker is not required to send Form 1099-DA. However, you still must report all crypto sales on your tax return.

3. Do I get a 1099-DA for buying crypto?

No. Buying crypto is not a reportable event. You only receive 1099-DA for sales (disposals) of crypto.

4. What if I used a DeFi platform?

Most DeFi platforms are not considered brokers and will not issue 1099-DA for 2025. You must self-report all DeFi transactions using blockchain records.

5. Can I ignore my 1099-DA if it's wrong?

No, but you can correct it. You must report the 1099-DA information on Form 8949, then adjust the cost basis with an explanation. The IRS receives a copy, so ignoring it will trigger an audit notice.

6. What if I traded on a foreign exchange?

Foreign exchanges may issue 1099-DA if they serve U.S. customers and are considered brokers. If not, you still must report all trades yourself. No 1099-DA doesn't mean no tax.

7. Will the IRS audit me if my return doesn't match my 1099-DA?

The IRS has automated matching systems that flag mismatches. If your reported proceeds differ from the 1099-DA, you'll receive a CP2000 notice (proposed tax adjustment). This is why accurate reconciliation is critical.

8. What if I transferred crypto between exchanges?

Transfers are not taxable events and should not appear as sales on 1099-DA. However, ensure the receiving exchange doesn't incorrectly report the transfer as a purchase with $0 basis.

9. Do I get a 1099-DA for staking rewards?

Potentially. Brokers may issue Form 1099-MISC for staking rewards (if >$600), not 1099-DA. The exact treatment is still evolving. Check with your exchange.

10. What happens if a broker fails to send my 1099-DA?

Contact the broker immediately and request your form. If they fail to provide it, you're still responsible for reporting all transactions. Use transaction history to reconstruct your sales.

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Summary: 1099-DA Requirements Checklist

For Brokers/Exchanges:

• Implement transaction tracking systems (completed by Jan 1, 2025)
• Develop cost basis calculation methodology
• Test 1099-DA generation systems (Q4 2024)
• Communicate requirements to users
• File Forms 1099-DA by January 31, 2026
• Provide copies to users by January 31, 2026

For Crypto Users:

• Expect Form 1099-DA in January 2026 if you had $600+ in sales
• Download all transaction history from every exchange
• Track cost basis for all crypto acquisitions (don't rely on broker)
• Reconcile 1099-DA with personal records
• Correct any cost basis errors on Form 8949
• Report all crypto activity, even if not on 1099-DA
• Consider using crypto tax software for accuracy

Key Takeaway: Form 1099-DA brings crypto tax reporting in line with traditional securities. The IRS now has visibility into crypto trading, making accurate compliance essential.

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About the Author

CryptoForms Research Team
This guide synthesizes IRS regulatory updates, Treasury Department proposals, and consultations with licensed CPAs specializing in digital asset taxation. Led by Nicholas Delgado (CEO/CTO) and Alex Cruzet (CAO, MAcc, MBA), with blockchain tax experience from EisnerAmper.

Last Reviewed: November 26, 2025
Next Review: January 2026 (after first 1099-DA issuance)

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Related Articles

Essential 1099-DA Resources:

• Form 1099-DA Complete Guide - Full breakdown of the form
• How to Read Your 1099-DA - Line-by-line explanation
• 1099-DA vs 1099-B: What's the Difference? - Compare forms
• Missing 1099-DA? What to Do - Troubleshooting guide

Crypto Tax Fundamentals:

• Complete Crypto Tax Guide 2026 - Start here
• How to Report Crypto on Your Taxes - Filing instructions
• Best Crypto Tax Software 2026 - Find the right tool

Exchange-Specific Guides:

• Coinbase Tax Guide - Coinbase 1099-DA specifics
• Kraken Tax Guide - Kraken reporting
• Gemini Tax Guide - Gemini compliance

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Disclaimer: This article provides general information about Form 1099-DA requirements and should not be considered legal or tax advice. Regulations are still evolving and may change before final implementation. Consult a qualified tax professional or attorney specializing in cryptocurrency for advice specific to your situation. CryptoForms is not a CPA firm and does not provide tax, legal, or accounting advice.

Publication Information:
Published: November 26, 2025
Updated: November 26, 2025
Word Count: 2,157 words
Read Time: 8 minutes

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