This blog was last updated on September 10, 2025
The world of tax compliance is changing fast, especially with the arrival of Form 1099-DA for digital assets. If you joined our recent webinar with Sovos and CoinTracker, you heard how the rules for digital asset tax compliance diverge sharply from those governing traditional assets like stocks and bonds. If you missed it, here are the highlights.
1099-DA vs. 1099-B: Key Differences in Digital Asset Reporting
Traditional brokers are familiar with Form 1099-B for stocks, bonds, and funds. Starting with 2025 transactions, digital asset brokers, middlemen, payment processors, and even real estate professionals handling crypto must issue Form 1099-DA.
Unlike 1099-B, Form 1099-DA introduces:
- New identifiers (DTI codes) instead of trading symbols or CUSIPs
- Unit precision up to 18 decimals for digital assets
- Different reporting rules for custodial sales, stablecoins, NFTs, and tokenized securities
Cost Basis Challenges for Digital Assets
Perhaps the biggest difference is cost basis tracking. In 2025, brokers will only report gross proceeds from digital asset sales. Beginning in 2026, however, cost basis reporting will be required, yet it will not cover assets purchased before 2026 or those transferred in from external wallets.
Unlike traditional finance, no standardized broker-to-broker transfer statements exist in crypto. This gap makes tools and processes for collecting customer-provided cost basis essential.
Additional Compliance Considerations for Brokers
Digital asset tax compliance extends far beyond the form itself. Key considerations include:
- W-8/W-9 collection and TIN matching are for every account starting 2025.
- Backup withholding applies to accounts without valid documentation beginning 2027.
- State reporting requirements vary, with some states, such as Montana, requiring direct digital asset filings even if they participate in federal combined programs.
- The overall scale is massive, with billions of new forms expected, which demands robust data aggregation, storage, and digital delivery strategies.
Why Centralization is Critical for Digital Asset Reporting
The clear message is that digital assets cannot be treated the same as traditional assets. The reporting framework is different, the technology requirements are more complex, and the stakes are higher with new penalties and customer expectations for seamless access.
There is also an opportunity. Financial institutions that are thoughtful about tax processes across their business can optimize outcomes, reduce the risk of errors and penalties and deliver a better, more consistent customer experience.
How to Prepare for Crypto Tax Reporting Changes
Form 1099-DA is the beginning of a new compliance era. As requirements evolve, financial institutions must prepare systems, train teams, and rethink reporting strategies. Watch the full 1099-DA reporting webinar on-demand to hear the full discussion and learn how your organization can prepare.