Form 1099-DA and the New Era of Crypto Tax Reporting: What Businesses Need to Know in 2026

For the better part of a decade, reporting crypto gains and losses to tax authorities was largely an honor system. Exchanges issued patchy 1099-K or 1099-MISC forms, if anything at all, and the burden of reconstructing cost basis across dozens of wallets fell entirely on the taxpayer. That era is now closing. With the 2025 tax year filings underway and the 2026 tax year already accruing transactions under a materially stricter regime, businesses that hold, pay in, or transact with digital assets need to understand exactly what has changed — and what is coming next.

The Form 1099-DA Rollout Is Now Live

The IRS’s final regulations on broker reporting for digital asset sales and exchanges took effect in phases. For transactions occurring on or after January 1, 2025, brokers — a term the IRS defines broadly to include centralized exchanges, certain hosted wallet providers, digital asset kiosks, and processors of digital asset payments (PDAPs) — were required to begin reporting gross proceeds on the new Form 1099-DA. Taxpayers who sold crypto on a centralized platform in 2025 should have received this form by mid-February 2026.

What makes 2026 the more consequential year is the next phase of the rollout: mandatory cost basis reporting. Beginning with assets acquired on or after January 1, 2026, and held continuously in the same broker’s account until sale, brokers must now report not just what a customer received from a sale, but what they originally paid. This “covered security” definition is narrow by design — assets transferred between wallets, acquired before 2026, or moved across platforms generally fall outside mandatory basis reporting — but it marks the first time the IRS will receive cost-basis data on digital assets at the same level of granularity it has long received for stocks and bonds.

For finance and accounting teams, this is the detail that matters most: the compliance bar has not just risen, it has become asset-specific and acquisition-date-specific. A business that acquired tokens in 2023, moved them to a new custodian in 2025, and sold them in 2026 will likely find that no broker is reporting basis on that lot at all — leaving the company itself fully responsible for substantiating the number it reports.

Why “No Form Received” Doesn’t Mean “No Obligation”

One of the most persistent misconceptions among finance teams is that a missing or incomplete 1099-DA equates to a missing tax obligation. It does not. The IRS has been explicit that taxpayers remain fully responsible for reporting all digital asset transactions — gains, losses, and income — regardless of whether a broker issues a form. This matters enormously for businesses with decentralized exchange activity, peer-to-peer settlements, or holdings in self-custodied wallets, none of which generate a 1099-DA under the current rules.

Practically, this means treasury and accounting functions cannot wait for a form to arrive before reconciling crypto activity. The forms that do arrive should be treated as one input into a reconciliation process, not the entirety of it. Businesses that built ad hoc spreadsheets to track basis in 2021 and 2022 are now discovering those records are the only defensible source of truth for assets that predate the broker reporting regime — and that the quality of those records will directly determine audit exposure.

State-Level Rules Are Adding a Second Layer of Complexity

Federal reporting changes are only part of the picture. States are increasingly carving out their own digital asset tax treatment, and the divergence is becoming a genuine compliance burden for multi-state businesses. Illinois, for example, has introduced a 0.2% tax on business activity involving digital assets as part of its state budget — a levy that sits entirely outside the federal capital gains framework and applies based on business activity rather than realized gains. Businesses operating across state lines should not assume that federal compliance, even done well, satisfies state-level obligations. Each jurisdiction is now a separate compliance surface.

This state-by-state fragmentation is likely to accelerate rather than resolve. As more states look to digital asset activity as a revenue source, businesses with any meaningful crypto treasury, payroll, or payments exposure should expect to track a patchwork of rules that federal guidance does not unify or simplify.

Crypto Payroll Adds Its Own Reporting Layer

Tax reporting is not the only compliance dimension in motion. Companies that pay any portion of salaries or contractor fees in digital assets are increasingly caught between two separate regulatory tracks: domestic tax reporting obligations and, for businesses with European operations, transparency requirements tied to frameworks like the EU’s Markets in Crypto-Assets (MiCA) regime and its associated reporting directives. A crypto payroll arrangement that is properly withheld and reported domestically can still fall short of EU transparency expectations if the receiving employee or the paying entity has EU nexus. Businesses running cross-border crypto payroll in 2026 need both tracks reviewed independently — treating one as a proxy for the other is a common and costly mistake.

What This Means for Audit Risk

The IRS’s increased visibility into broker-reported transactions changes the calculus on audit risk in a specific way: discrepancies between what a broker reports and what a taxpayer files are now far easier for the agency to detect automatically, the same way mismatches between W-2 wages and reported income have long been flagged. A business that underreports gains on covered securities is not relying on the IRS missing the transaction — it is relying on the IRS not cross-referencing data it now receives by default.

This shifts the practical risk profile for finance teams. The highest-risk category is no longer unreported crypto activity in general; it is mismatches on the specific subset of transactions now subject to broker reporting, because those are the easiest for the IRS to flag programmatically. Conversely, assets acquired before 2026 or moved across custodians retain the older, harder-to-detect risk profile, but also carry the burden of proof entirely on the taxpayer if questioned.

Practical Steps for Finance and Accounting Teams

Several concrete actions can meaningfully reduce both compliance risk and year-end reconciliation effort:

• Map every digital asset holding to its broker reporting status. Determine which holdings will generate a 1099-DA with basis, which will generate one without basis, and which will generate nothing at all. Each category requires a different recordkeeping approach.
• Treat pre-2026 acquisitions as permanently self-reported. Since most pre-2026 holdings will never receive broker-reported basis even after transfer, the internal records for these lots are the only defense in an audit. Lock down acquisition-date documentation now rather than reconstructing it retroactively.
• Separate state tax obligations from federal ones in your compliance calendar. Don’t let a single annual “crypto tax review” stand in for what is now a multi-jurisdiction obligation, particularly in states experimenting with activity-based digital asset levies.
• Audit cross-border payroll arrangements against both U.S. and EU frameworks independently. A compliant domestic payroll structure is not evidence of MiCA-aligned transparency, and vice versa.
• Build a reconciliation process that doesn’t depend on receiving a form. Given that decentralized exchange activity and self-custodied wallets fall outside the 1099-DA regime entirely, internal tracking needs to function as the primary system, not a backup to broker reporting.

The International Picture Is Moving in the Same Direction

The United States is not acting in isolation. The OECD’s Crypto-Asset Reporting Framework (CARF) is being adopted on a rolling basis by member jurisdictions, and the EU has folded equivalent obligations into its DAC8 directive, which extends the bloc’s existing tax administrative cooperation rules to crypto-asset service providers. The practical effect is the same pattern seen domestically with Form 1099-DA: exchanges and custodians operating across these jurisdictions will be required to collect and automatically exchange customer transaction data with tax authorities, removing the assumption that activity on a non-domestic platform falls outside any government’s view.

For multinational businesses, this convergence matters more than any single jurisdiction’s rule. A treasury function that has historically routed digital asset activity through whichever exchange offered the lightest reporting touch will find that option closing as CARF and DAC8 participants expand. The more durable strategy is to assume that any platform a business uses today will be subject to automatic information exchange within one to two reporting cycles, and to build internal recordkeeping accordingly rather than relying on jurisdictional gaps that are actively being closed.

What Auditors and CFOs Are Already Asking For

Audit committees and external auditors are adjusting their expectations faster than many internal finance teams have adjusted their processes. Where a crypto holding was once treated as a single line item supported by an exchange statement, auditors increasingly expect a transaction-level ledger that reconciles to acquisition date, cost basis, and disposal method for each lot — the same standard long applied to marketable securities. Businesses that cannot produce this breakdown on request are increasingly being asked to engage third-party crypto tax software or specialist reconciliation firms before their next audit cycle, rather than after a discrepancy is flagged.

This is a meaningful shift in posture: digital assets are moving from a disclosure note to a fully reconciled balance sheet item in the eyes of auditors, well ahead of many companies’ internal systems catching up. CFOs who get ahead of this expectation — by commissioning a lot-level reconciliation now, rather than waiting for an auditor to request one — will find the eventual audit conversation considerably shorter.

The Broader Direction of Travel

Industry commentary, including analysis from major tax publishers tracking the 1099-DA rollout, has consistently described 2026 as a “transition year” — a label that undersells how much is changing under the surface. The direction is unambiguous: digital assets are being absorbed into the same reporting infrastructure that has long applied to traditional securities, asset by asset and jurisdiction by jurisdiction. Businesses that treat this as a one-time compliance update will find themselves perpetually behind. Those that build durable, asset-level reconciliation processes now — independent of whatever form does or doesn’t arrive in February — will be the ones still compliant when the next phase of reporting expansion arrives.

The honor-system era of crypto taxation is over. What replaces it is not yet a fully unified framework, but a fast-tightening mesh of federal, state, and cross-border obligations that reward businesses with disciplined recordkeeping and penalize those still treating digital assets as an afterthought in their tax function.