Digital Asset Reporting
With the emergence of the cryptocurrency, the IRS/US Treasury Department is reiterating the importance of proper reporting of Digital Assets. Here are some key points that need to be remembered:
Here’s a summary of the current rules, obligations, and upcoming changes for digital asset reporting by the IRS / Treasury. If you tell me which year you’re focusing on (2025, 2026, etc.), I can tailor more precisely.
What counts as a “digital asset”
- The IRS uses “digital asset” broadly: it includes cryptocurrencies (e.g. Bitcoin, Ether), stablecoins, non‑fungible tokens (NFTs), and other digital representations of value recorded on a cryptographically‑secured distributed ledger (or similar technology).
- Digital assets are treated as property for federal tax purposes.
Who must report: “Brokers” & other entities
Some entities are required to file AND furnish statements about sales, exchanges, etc.:
- Custodial digital asset trading platforms (i.e. exchanges)
- Certain hosted wallet providers (wallets they control or “host”)
- Digital‑asset kiosks and certain processors of digital asset payments (PDAPs)
These are “custodial brokers” in practice. Non‑custodial or decentralized platforms / brokers (wallets where the user alone holds keys, DEXs, etc.) are not (yet) fully in scope, though the IRS/Treasury are studying how to bring them under rules in future regulations.
What must be reported and when
| Requirement | Transactions affected | Effective/Reporting date |
|---|---|---|
| Gross proceeds from sales/exchanges of digital assets | All sales/exchanges by custodial brokers, etc. (custodial brokers disposing of digital assets on behalf of customers) | Transactions on or after January 1, 2025 → reported on Form 1099‑DA, to be filed / furnished in 2026. |
| Cost basis / gain or loss information | For certain digital asset sales (by custodial brokers) beginning in calendar year 2026 (for transactions in 2026) | Effective for transactions on/after January 1, 2026; reports filed in 2027. |
| Real‑estate transactions using digital assets | When digital assets are used as payment in real estate closing, for “real estate professionals” treated as brokers | For closings on or after January 1, 2026 |
Additional rules and relief
- There are de‑minimis thresholds and optional aggregate reporting for certain stablecoins and NFTs to reduce burden. This means, for example, small sales below certain levels may be handled more simply.
- There is transition/penalty relief for brokers in 2025 for certain obligations if they make a “good faith” effort to comply.
- Backup withholding rules also apply under certain conditions.
What taxpayers (individuals) should know / do
- Even before all of these reporting requirements kick in, taxpayers are responsible for correctly reporting gains or losses from digital assets on their tax returns. If you sold, traded, exchanged, used crypto, etc., you will likely need to use Form 8949 / Schedule D (for capital gains / losses) or report ordinary income if digital assets were received as income (e.g. mining, staking, etc.).
- Keep detailed records: dates acquired, cost basis (purchase price, or value when received), dates sold or disposed, proceeds, any fees, etc. This gets more important with the changes requiring basis reporting.
- For digital assets received for services (work, mining, etc.), the fair market value at the time received is taxable as income.
Key dates & deadlines
- Jan 1, 2025: Transactions (sales/exchanges) begin to be reportable by brokers via Form 1099‑DA for gross proceeds.
- 2026: Brokers must begin reporting cost basis / gain or loss for certain digital asset transactions.
- Jan 1, 2026: Real estate transactions using digital assets to be reported by real estate professionals.