Form 1099-DA: What Brokers Must Report to the IRS in 2026

Form 1099-DA is the IRS information return custodial brokers must file to disclose gross proceeds from customers' crypto dispositions, with cost basis reporting phasing in for covered securities starting in 2026.

Think of it as a W-2 for crypto sales, where the broker reports, the customer gets a copy, and the IRS has the numbers before anyone files a return.

That structure comes from Form 1099-B, the existing standard for securities reporting. The crypto-specific fields, including wallet addresses and transaction IDs, are what make it a distinct filing.

How 1099-DA differs from other 1099 forms:

• vs. Form 1099-B: 1099-DA includes fields like wallet addresses, transaction IDs, and Digital Token Identifier Foundation codes, none of which exist in traditional securities reporting

• vs. Form 1099-MISC / 1099-NEC: those forms capture income events like staking rewards or referral bonuses over $600. Form 1099-DA tracks proceed from sales or exchanges, a capital event, not an income event

What qualifies as a digital asset under the form:

• Cryptocurrencies and stablecoins, including Bitcoin, ETH, USDC, and USDT

• Non-fungible tokens sold on custodial marketplaces, unique digital collectibles or assets tied to specific content

• Tokenized real-world assets and wrapped tokens, physical or financial assets converted into blockchain representations

• Certain synthetic or derivative digital contracts

The IRS hasn't finalized rules for everything. Per Notice 2024-57, these transaction types are currently exempt:

• Staking transactions, where validators earn rewards for securing a blockchain

• Lending arrangements, where crypto is loaned out for yield

• Liquidity pool activity, where assets sit in DeFi protocols, generating fees

• Notional principal contracts, derivative instruments settled against crypto values

Phased rollout:

Those dates govern what must be reported. For 2025 transactions, recipient copies are due by February 17, 2026, and electronic IRS filing by March 31, 2026.

The obligation falls on U.S. digital asset brokers, defined under IRC § 6045 as any U.S. person that stands ready to effect sales of digital assets on behalf of others. It reads broadly by design, much like the way the BSA defines a financial institution to include entities well beyond traditional banks.

If your platform takes custody of customer funds and facilitates the sale or transfer of those assets, the definition covers you. The IRS wrote it broadly on purpose, closing reporting gaps that existed when crypto had no dedicated form.

Six categories are covered under the final regulations.

1. Custodial trading platforms and exchanges are operators that hold customer assets and execute trades on their behalf.
2. Hosted wallet providers, firms that hold private keys on behalf of users and process their dispositions, similar to how a brokerage account holds securities on behalf of an investor.
3. Digital asset kiosk operators, persons who own or operate Bitcoin ATMs, and regularly redeem assets they issued.
4. Processors of digital asset payments are intermediaries that receive crypto from one party and pay it, or its cash equivalent, to another. Reporting isn't required if a customer's total sales through the processor are $600 or less per year.*
5. Real estate reporting persons, professionals with actual knowledge that crypto was used as payment in a closing on or after January 1, 2026.
6. Digital asset middlemen are firms that accept crypto as payment for broker services or as part of other qualifying transactions.

Not everyone falls in. Three categories sit outside the current rules.

1. Noncustodial and decentralized platforms that don't take possession of customer assets or control private keys, the cryptographic credentials that give access to a wallet, with separate rulemaking still pending.
2. Validators and miners, the nodes that process and confirm transactions on a blockchain, act exclusively as such with no additional brokerage function.
3. Sellers or licensors of self-custody hardware or software, provided they offer no additional services on top.

In FS-2024-23, the IRS confirmed that "the final regulations do not include reporting requirements for brokers commonly known as decentralized or non-custodial brokers that do not take possession of the digital assets being sold or exchanged."

What goes on each Form 1099-DA depends on when the asset was acquired and whether it qualifies as a covered or noncovered security. The box-level requirements are where compliance teams spend most of their time.

A covered security is any digital asset acquired through a custodial broker on or after January 1, 2026. Assets acquired before that date, or transferred in from an external wallet, are non-covered. That distinction determines which column of the table applies, and it also determines Box 9.

Checking Box 9 signals non-covered status, waives basis reporting, and shields the broker from penalties under IRC §§ 6721 and 6722, even if the voluntarily reported basis turns out to be incorrect. Leaving it unchecked exposes the broker to full penalties, no matter the asset's acquisition date.

Beyond the box-level requirements, the IRS created filing carve-outs for lower-volume activity. De minimis, meaning below the minimum threshold to trigger an obligation, applies to two asset categories here. The PDAP, or digital asset payment processor, threshold was addressed in the previous section.

Qualifying stablecoins using the optional reporting method require no filing if total gross proceeds stay at or below $10,000 per customer per year.

• Specified NFTs under the same method require no filing if total gross proceeds stay at or below $600 per customer per year.

The Notice 2024-57 carve-outs stop at the transaction level. Rewards or compensation earned through staking, lending, or liquidity pool participation remain separately reportable. What those activities produce is still in scope.

The form shifts the compliance burden squarely onto the broker. Getting the filing right depends on what data the underlying systems capture at the transaction level, customer identity, asset type, proceeds, and timing.

For payment processors and custodial platforms building U.S. operations, that decision happens before the first reportable transaction. Mercuryo's on/off-ramp infrastructure embeds KYC and AML verification at the point of transaction, so the identity and proceeds data 1099-DA requires getting captured before it becomes a filing problem.

Brokers who treat reporting as an afterthought will feel it when the first filing cycle closes. The ones who don't are already building.

Picture a real estate agent who holds the keys versus a listing site that just shows properties. That's roughly the line the IRS drew. Noncustodial platforms that never touch customer assets got carved out in FS-2024-23.

The exemption isn't automatic, though. Separate rules for decentralized platforms are still being written, and if your setup is anywhere near the custody line, get a legal read before assuming you're clear.

Yes. Stablecoins aren't exempt. The IRS puts them in the same bucket as any other digital asset, which means sales and exchanges get reported. There's an optional method that waives filing under $10,000 in qualifying proceeds per customer per year, but that's a ceiling on volume, not a pass on the asset type.

Not for 2025. Brokers send the IRS what a customer walked away with from a sale. What they originally paid doesn't come into play until assets acquired from January 1, 2026 onward.

Fines under IRC §§ 6721 and 6722 run up to $340 per missing or incorrect return. It adds up fast at scale.

Notice 2024-56 and Notice 2025-33 offer some breathing room, but only for brokers with a documented, good-faith compliance effort. Doing nothing qualifies for none of it.