The 1099-DA Era Is Real: Final Crypto Broker Reporting Rules for Custodial Platforms

What changed

On June 28, 2024, the IRS and Treasury released final regulations (T.D. 10000) on information reporting by brokers for sales and exchanges of digital assets. The regulations were published in the Federal Register on July 9, 2024, and they create a new return, Form 1099-DA, for digital-asset proceeds.

For years, digital-asset gains have been fully taxable while the third-party reporting that exists for stocks and mutual funds did not exist for crypto. That asymmetry is what the rule closes. Brokers in the securities world issue Forms 1099-B; custodial digital-asset brokers will now issue Forms 1099-DA.

Who is covered

The final rule reaches custodial brokers — those that take possession of the digital assets being sold on behalf of customers. In practice, that includes:

• operators of custodial trading platforms, including centralized exchanges
• certain hosted-wallet providers
• digital-asset kiosks
• certain processors of digital-asset payments

These are the businesses that already hold customer assets and execute customer transactions, and they are the ones now responsible for tracking and reporting the relevant information.

What gets reported, and when

The reporting is phased in over two years, which is the most important operational fact in the rule:

• gross proceeds from sales occurring on or after January 1, 2025 must be reported. The first Forms 1099-DA covering those sales will be filed and furnished in early 2026.
• cost basis for digital assets acquired on or after January 1, 2026 must be reported, beginning with the returns filed for that year.

The two-step sequencing — proceeds first, basis a year later — mirrors how securities reporting was introduced, and it gives brokers a defined runway. It also means that, for a transition period, customers will receive forms showing proceeds without basis, which makes accurate self-reporting of basis a live issue for investors.

To ease the transition, the IRS issued accompanying guidance providing penalty and backup-withholding relief for good-faith compliance in the first year, identifying certain complex transactions for which 1099-DA filing is not required pending further guidance, and offering a safe harbor allowing taxpayers to allocate unused basis across wallets and accounts as of January 1, 2025.

The DeFi reprieve is not an exemption

The most consequential boundary in the final rule is what it leaves out. Non-custodial and decentralized-finance arrangements — where no intermediary takes possession of the assets — are not covered by this rule. Treasury reserved on how the broker definition applies to those participants and deferred them to a separate, later rulemaking.

The distinction is between custody and code. A platform that holds customer assets is in. A protocol where users transact without surrendering custody is, for now, outside this rule.

Two things follow. First, the deferral is exactly that — Treasury signaled that further rulemaking for non-custodial actors is coming, not that it has decided to leave them unreported. Second, the existence of a custodial-only rule does not change the underlying tax: gains realized through decentralized platforms are taxable whether or not a third party reports them, and the burden of accurate reporting sits with the taxpayer.

What this means for the businesses building toward it

For custodial brokers, the work is concrete and time-bound:

• the systems to capture, retain, and report transaction data must be operational for 2025 sales
• customer onboarding, basis tracking, and information-return processes need to be designed against the 1099-DA specifications
• the first-year relief is a cushion for good-faith effort, not a reason to defer the build

For investors and their advisors, the practical implication is that more of their digital-asset activity will be visible to the IRS, beginning with 2025 sales — and that the transition period, with proceeds reported ahead of basis, raises the cost of poor recordkeeping.

Key takeaways

• T.D. 10000 (released June 28, 2024; Federal Register July 9, 2024) finalizes broker reporting on Form 1099-DA for custodial digital-asset brokers.
• Gross-proceeds reporting begins for sales on or after January 1, 2025; basis reporting begins for acquisitions on or after January 1, 2026.
• Centralized exchanges, certain hosted-wallet providers, kiosks, and certain payment processors are covered.
• Non-custodial and DeFi actors are deferred to later rulemaking — a reprieve, not an exemption — and the underlying gains remain taxable.

What to do now

1. For custodial brokers, start the 1099-DA build immediately.

Systems must capture 2025 sales. First-year penalty relief rewards good-faith effort, not delay.

2. For investors, fix basis recordkeeping before the transition bites.

Forms will show proceeds before basis. Use the wallet-allocation safe harbor and keep clean acquisition records.

3. For DeFi participants, do not mistake the deferral for relief.

Further rulemaking is expected, and decentralized gains are taxable now regardless of who reports them.

Bottom line

The 1099-DA regime turns crypto from an unreported asset class into a reported one, starting with custodial platforms and 2025 sales. The compliance clock is already running for brokers, and the recordkeeping clock is already running for investors. Decentralized finance bought time — nothing more.