IRS Introduces New Form 1099-DA for Easier Cryptocurrency Reporting

• The United States Internal Revenue Service (IRS) has released a new draft tax form for reporting cryptocurrency transactions.
• Starting from the 2026 tax year, this form is designed to simplify the process for taxpayers.
• This move comes after significant feedback from the crypto industry, leading to notable changes in the form’s initial version.

Discover the latest IRS draft tax form aimed at simplifying crypto transaction reporting and its potential impact on the industry.

IRS Introduces Form 1099-DA for Crypto Transactions

The IRS unveiled Form 1099-DA on August 8, titled “Income from Digital Asset Broker Transactions.” This form aims to streamline the reporting of cryptocurrency transactions, particularly those conducted through centralized exchanges. The draft version no longer requires the reporting of transaction times, wallet addresses, and transaction IDs, addressing privacy concerns raised by the industry.

Mandatory Reporting from 2026 Onwards

Under the new regulations, U.S. crypto users will need to report transactions conducted through brokers starting from 2025, with the first reports due by April 2026. This measure is intended to ensure more accurate and comprehensive reporting of cryptocurrency transactions by taxpayers.

Industry Feedback and IRS Response

The crypto industry has heavily criticized prior IRS drafts, emphasizing the need to protect user privacy and avoid unnecessary data reporting. Crypto law expert Drew Hinkes noted that the new draft significantly reduces reporting obligations, reflecting the IRS’s responsiveness to industry feedback.

Exemptions for Decentralized Exchanges and Self-Custody Wallets

Decentralized exchanges and self-custody wallets were exempted from the new reporting requirements in the latest June regulations. The IRS plans to introduce additional regulations for these platforms in the future, indicating that it is closely monitoring developments in the crypto ecosystem and is prepared to adjust its policies accordingly.

Upcoming Regulations and Public Feedback

The draft form is not final; the IRS is seeking public and industry feedback before finalizing it. Stakeholders, including crypto users and intermediaries, have 30 days to submit their views and suggestions. Enhanced regulations for decentralized and noncustodial brokers are set to be released in 2024, highlighting their importance for the sector’s future.

Conclusion

The IRS’s new draft tax form for crypto transactions is a significant step towards clearer and more transparent reporting. The agency’s willingness to incorporate industry feedback and make necessary adjustments showcases a commitment to balancing regulation with the sector’s unique needs. As these developments unfold, they will likely play a crucial role in enhancing tax compliance and reducing uncertainties in the crypto world.