Asset Broker Reporting: Digital Asset Broker Regulations - TaxBit

The U.S. Treasury and IRS have issued comprehensive digital asset reporting regulations, reshaping the obligations for brokers handling cryptocurrencies and other digital assets.

These regulations, finalized in June 2024 and enhanced in December 2024, expand the scope of digital asset brokers, and introduce new information reporting requirements and deadlines.

Introducing Form 1099-DA for Digital Asset Transactions

A pivotal change introduced by the IRS is Form 1099-DA, a new tax document specifically designed for reporting digital asset sales and exchanges. This applies to sales, exchanges, and digital asset transactions – including cryptocurrencies, stablecoins, and NFTs.

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Custodial Brokers

Effective reporting date of January 1, 2025

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Non-Custodial Brokers

Effective reporting date of January 1, 2027

Who is affected?

The updated regulations redefine the term ‘broker’ to include a broader range of entities involved in digital asset transactions. This expansion ensures that various actors across the ecosystem are subject to the same reporting requirements, regardless of whether they operate in a centralized or decentralized capacity.

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Custodial Exchanges

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Certain Payment Processors

Certain Wallet Providers

Certain DeFi Platforms

Reporting Requirements

Digital W9/W8

Brokers must collect Forms W-9 and W-8, documenting customers as US or Non-US, and properly certifying their US Taxpayer Identification Numbers (TINs).

DA Cost Basis

Brokers are required to track and report the cost basis of disposed assets starting January 1, 2026.

1099-DA

Reporting proceeds from digital asset sales is mandatory for custodial brokers by January 1, 2025.

EXPERT ADVICE

Operational Impact of Finalized Digital Asset Regulations

With the U.S. Treasury’s new regulations now in effect, it’s crucial for Digital Asset Brokers to understand and adapt to these changes. This eBook provides clear guidance on how to navigate the operational challenges of digital asset tax compliance. Download it to ensure your enterprise is fully prepared.