Final Digital Asset Reporting Rules: What Taxpayers Need to Know

On June 28, 2024, the U.S. Department of the Treasury and the Internal Revenue Service issued long-anticipated final regulations governing the tax reporting of digital asset transactions. These regulations implement the reporting requirements enacted by the Infrastructure Investment and Jobs Act (IIJA) and mark a major step in bringing digital asset tax reporting closer to the level of traditional financial assets like stocks and bonds.

Although taxpayers have always owed tax on gains and other income from digital assets, the new rules create structured reporting requirements that will make it easier for brokers and holders to comply with tax law and for the IRS to verify reporting.

Why These Regulations Were Issued

Digital assets (such as cryptocurrency, stablecoins, and non-fungible tokens) are treated as property for federal tax purposes. Taxpayers must report all income received from digital asset transactions, including sales, exchanges, and use as payment for services or goods.

Historically, digital asset brokers and platforms did not issue robust informational statements like traditional brokers do (e.g., Form 1099-B for stocks). The IIJA amended IRC § 6045 to require enhanced information reporting for digital asset sales and exchanges, and the Treasury and IRS’s final regulations implement those statutory requirements.

Who Must Report and What Must Be Reported

1. Brokers Will Report Digital Asset Transactions

Under the final regulations, certain entities defined as brokers will be required to file information returns and issue statements to customers reporting digital asset transaction details. Brokers include:

• Custodial digital asset trading platforms

• Certain digital wallet providers

• Digital asset payment processors under specific conditions

• Other intermediaries that take possession of a customer’s digital assets and effect sales or exchanges

2. What Information Must Be Reported

The new reporting obligations are phased in:

• Gross Proceeds Reporting (Form 1099-DA) Brokers must report gross proceeds from digital asset sales or exchanges for transactions occurring on or after January 1, 2025. Statements to customers and corresponding IRS filings are expected in early 2026.

• Basis and Gain/Loss Reporting Brokers will be required to report tax basis and gain or loss information for transactions arising on or after January 1, 2026 (reported in 2027).

The purpose of this reporting is to make it easier for taxpayers to determine the tax impact of their transactions and for the IRS to match taxpayer filings to broker records.

Impact on Digital Asset Holders

A. Easier Tax Compliance

Taxpayers who buy, sell, or exchange digital assets through a broker will likely start receiving a Form 1099-DA (Digital Asset Proceeds From Broker Transactions) that shows:

• Gross proceeds from sales and exchanges

• Basis (in future years once reporting is phased in)

• Gain or loss on transactions (once basis reporting is required)

This information will help taxpayers complete Form 8949 and Schedule D (or other applicable tax forms) accurately.

B. Per-Wallet or Per-Account Basis Tracking

The regulations also move away from a universal basis pool method. For tax year 2025 and beyond, taxpayers generally must track cost basis on a per-wallet or per-account basis, especially for transactions reflected on broker statements.

C. Transitional Relief for Brokers

To give brokers time to adjust, the IRS provided transition relief through notices such as Notice 2024-56 and Notice 2025-33, which:

• Delay penalties for failure to file and furnish 1099-DA if brokers make a good-faith effort

• Provide relief from backup withholding penalties for certain years and transactions

This transitional structure acknowledges the complexity of adopting new reporting systems while ensuring momentum toward compliance.

Exceptions and Future Developments

Certain transactions remain excluded from current reporting obligations — including some types of decentralized finance (DeFi) activities and non-custodial broker services — although future guidance may expand coverage.

Additionally, there is ongoing regulatory and legislative activity related to digital asset reporting. Industry stakeholders continue to watch proposals and adjustments to broker definitions, reporting thresholds, and enforcement timelines.

Bottom Line for Tax Planning

The final digital asset reporting regulations do not change the fact that income from digital asset transactions is taxable. However, they mark a major shift in how the tax system will capture and share information that helps taxpayers comply and reduces audit risk.

Digital asset holders and brokers should prepare for:

• Receiving Forms 1099-DA for applicable transactions beginning with sales in 2025

• Tracking cost basis on a per-wallet or per-account basis

• Reconciling personal records with broker-reported information

• Adjusting tax planning and compliance processes accordingly

Given the evolving nature of the digital asset tax landscape, consultation with tax professionals experienced in digital assets is essential for both individual taxpayers and industry participants.