Regulations are here for custodial digital asset brokers, and now DeFi.
Learn more about the details and how Taxbit can help you navigate the new guidance.
The U.S. Treasury and IRS has issued comprehensive digital asset reporting regulations, reshaping the obligations for brokers handling cryptocurrencies and other digital assets.
These regulations, finalized in June 2024 and enhanced in December 2024, expand the scope of digital asset brokers, and introduce new information reporting requirements and deadlines.
Introducing Form 1099-DA for Digital Asset Transactions
A pivotal change introduced by the IRS is Form 1099-DA, a new tax document specifically designed for reporting digital asset sales and exchanges. This applies to sales, exchanges, and digital asset transactions – including cryptocurrencies, stablecoins, and NFTs.
Custodial Brokers
Effective reporting date of January 1, 2025
Non-Custodial Brokers
Effective reporting date of January 1, 2027
Who is Affected?
The updated regulations redefine the term ‘broker’ to include a broader range of entities involved in digital asset transactions. This expansion ensures that various actors across the ecosystem are subject to the same reporting requirements, regardless of whether they operate in a centralized or decentralized capacity.
Custodial Exchanges
Certain Payment Processors
Certain Wallet Providers
Certain DeFi Platforms
Reporting Requirements
Digital W9/W8
Brokers must collect Forms W-9 and W-8, documenting customers as US or Non-US, and properly certifying their US Taxpayer Identification Numbers (TINs).
DA Cost Basis
Brokers are required to track and report the cost basis of disposed assets starting January 1, 2026.
1099-DA
Reporting proceeds from digital asset sales is mandatory for custodial brokers by January 1, 2025.
DETAILED ANALYSIS
US Treasury Regulations
See our recent blog posts for expert insights from Taxbit and a comprehensive breakdown and analysis of the digital asset broker regulations coming from the IRS and the US Treasury.
Experience modern tax compliance
Eliminate manual efforts and data inconsistencies with automated ingestion, calculation, and remediation of user or transaction data.
EXPERT ADVICE
Operational Impact of Finalized Digital Asset Regulations
With the U.S. Treasury’s new regulations now in effect, it’s crucial for Digital Asset Brokers to understand and adapt to these changes. This eBook provides clear guidance on how to navigate the operational challenges of digital asset tax compliance. Download it to ensure your enterprise is fully prepared.
DIGITAL ASSETS
Eliminate missing cost basis at the source
Banish “missing cost basis” issues by joining an industry-wide network to automatically calculate, share, and file accurate cost basis for all transactions.
DIGITAL W9/W8
Automate your tax documentation process
Deploy a seamlessly embedded workflow to collect, validate, and store forms W-9, W-8BEN, or W-8BEN-E from your users and utilize them for information reporting purposes.
TAX CENTER APIS
Make tax reporting easier on customers
Give your customers real-time insights and access to tax forms by using our tax center APIs to embed information reporting into your application or customer experience.
