Crypto Tax: Form 1099-DA: What Crypto Investors Need to Know

Starting in January of next year (2026), Form 1099-DA will reshape the way cryptocurrency income is reported to the IRS.

In this guide, we’ll explain what Form 1099-DA is, how it will affect centralized and decentralized exchanges, and the steps you can take to stay proactive and avoid trouble with the IRS.

What is Form 1099-DA, and why does it matter?

Form 1099s are tax forms designed to report income that you may have earned outside your job to the IRS. It’s likely that you have received a 1099 form in the past — many stock brokerages send Form 1099-B to report capital gains and losses from equities.

Starting in 2026, cryptocurrency exchanges will be required to issue a new tax form — Form 1099-DA. The form is designed to report taxable income from the disposal of digital assets to customers and the IRS.

Form 1099-DA will report income from activities like:

• Selling crypto for fiat
• Trading one crypto for another
• Using crypto to purchase goods or services

Why does it matter?

Starting in 2026, the IRS will have more information about taxable income from cryptocurrency than ever before. If you don’t report your crypto income, it could lead to an IRS warning letter or even an audit.

Who is required to issue Form 1099-DA?

Any platform that falls under the Treasury’s definition of a ‘crypto broker’ will be required to issue Form 1099-DA.

Starting in 2026, centralized crypto exchanges will be required to issue Form 1099-DA. Eventually, decentralized exchanges and certain providers will fall under the same requirements:

How will Form 1099-DA impact decentralized exchanges?

It’s still unclear how decentralized exchanges will adapt to Form 1099-DA requirements.

Unlike traditional financial institutions, many DEXs are non-custodial and do not hold cryptocurrency — meaning that in the past, they have not been required to identify users.

To be able to issue Form 1099-DA, many of these platforms will soon be required to adapt Know Your Customer processes.

This could mean:

• New identity verification requirements on previously permissionless platforms
• Reduced anonymity for users transacting on-chain

While these regulations may cause some decentralized projects to exit the U.S. market, others may introduce new identity and reporting infrastructure to remain available to American users.

Will Form 1099-DA be accurate?

Form 1099-DA is designed to simplify crypto tax reporting, but the information on the form may be inaccurate and incomplete — especially for users who frequently move assets between wallets and platforms.

For example, if you bought ETH on one exchange and later transferred it to a DEX to trade, the DEX won’t know your original cost basis. That means your cost basis may be reported as ‘n/a’ on Form 1099-DA, and the entire value of your disposal may be treated as a capital gain.

These types of issues can result in inaccurate gain/loss reporting and investors overpaying their taxes.

That’s why it’s important to keep complete records of your crypto activity and not rely solely on the form.

What should I do to stay proactive?

Here are a few steps you can take to ensure you’re ready when exchanges start issuing Form 1099-DA:

1. Stay on top of your tax liability

If you haven’t already started tracking your cryptocurrency for tax purposes, start immediately. Download relevant csv files from all the wallets and exchanges where you’ve traded cryptocurrency.

2. Review any 1099s you receive carefully.

As mentioned earlier, Form 1099-DA may be inaccurate if you’ve transferred cryptocurrency between wallets and exchanges. Don’t assume the form is correct; reconcile it with your actual records before filing.

3. Consider using crypto tax software

Use a crypto tax platform like CoinLedger to sync data from all your cryptocurrency platforms and generate an accurate tax report in minutes.

In conclusion

The important thing to remember about 1099-DA requirements is that they will become effective for the 2025 tax year; hence, it will be advantageous to be ahead and ready for them. Getting into the planning mode now will give you priceless confidence and illuminate the path through the crypto tax jungle, avoiding any surprises down the road in tax season.