Starting with sales and exchanges on or after January 1, 2025, U.S. crypto exchanges and other digital asset brokers report their customers’ transactions to the IRS on a new form, Form 1099-DA. The first 1099-DAs, covering 2025, arrived in early 2026.
This article is for Japanese expats and other U.S. residents who trade crypto. It explains what Form 1099-DA changed, which brokers have to issue it, when cost basis is missing, how to reconcile the form with Form 8949, and the wallet-by-wallet basis rules that took effect in 2025, including the Rev. Proc. 2024-28 transition.
For 2026 transactions, brokers also start reporting basis for some sales, and the way you tell a broker which units you are selling has changed. If you plan to harvest losses before year-end, read this before you sell in November or December.
Key points
- Form 1099-DA is the new information return U.S. digital asset brokers use to report customers’ sales and exchanges. It applies to transactions on or after January 1, 2025.
- For 2025 transactions, brokers report gross proceeds, and most 1099-DAs do not show cost basis. You have to calculate basis yourself.
- For transactions on or after January 1, 2026, brokers must also report basis for “covered securities”: digital assets acquired in 2026 or later in the same custodial account. Assets bought before 2026 or transferred in are not covered.
- Some stablecoin and NFT sales below annual thresholds may not be reported, and DeFi (non-custodial) brokers and some foreign brokers do not issue 1099-DAs. Your obligation to report does not change.
- Since 2025, basis is tracked wallet by wallet (account by account). Rev. Proc. 2024-28 is the transition rule for allocating unused basis to each wallet or account as of January 1, 2025.
What Form 1099-DA covers, and which brokers file it
According to the IRS, broker reporting of digital asset transactions comes from changes to Internal Revenue Code section 6045 made by the Infrastructure Investment and Jobs Act, signed in late 2021, and reporting on Form 1099-DA is required beginning with transactions on or after January 1, 2025 (IRS: Digital assets).
For tax purposes, a digital asset is any digital representation of value recorded on a cryptographically secured distributed ledger, such as a blockchain, that is not cash (U.S. dollars or a government-issued currency). That includes cryptocurrencies like bitcoin, stablecoins, and NFTs. Digital assets are treated as property, not currency.
| Type of business | Files Form 1099-DA? |
|---|---|
| U.S. custodial trading platforms (they hold your assets and execute your trades) | Yes |
| Certain hosted wallet providers, digital asset kiosks (ATMs), and certain processors of digital asset payments (PDAPs) | Yes |
| DeFi and other non-custodial brokers that never take possession of your assets | No requirement under the final regulations |
| Brokers outside the U.S. (for example, Japanese crypto exchanges) | Generally only U.S. brokers must file |
The Form 1099-DA instructions say that, generally, only a U.S. digital asset broker is required to report on Form 1099-DA. IRS fact sheet FS-2025-06 also warns that DeFi brokers and some foreign brokers are not required to file Form 1099-DA or furnish a statement.
Want an IRS Enrolled Agent to handle this for you? See your fee in a minute. See your fee →
2025 vs. 2026 and later: proceeds and basis
| Item | 2025 transactions | 2026 and later |
|---|---|---|
| Gross proceeds | Reported | Reported |
| Cost basis | Missing on most 1099-DAs | Reported for covered securities |
| What counts as covered | — | Acquired in 2026 or later in a broker custodial account and held there until sold |
| Noncovered (no basis reporting required) | — | Acquired before 2026, transferred in from another account or wallet, and similar |
FS-2025-06 says brokers had to furnish statements for 2025 transactions by February 17, 2026, and that most of those statements would not include basis, so taxpayers must calculate basis before filing their 2025 returns.
The 2026 instructions define a covered security as a digital asset acquired after 2025 in an account for which the broker provided custodial services and held in that account until the broker sells it. Anything acquired before 2026, or transferred in from another broker or your own wallet, is noncovered. A broker that voluntarily reports basis for a noncovered asset checks Box 9.
Boxes worth checking on Form 1099-DA
- Box 1g: cost basis, if shown
- Box 2: checked if basis was reported to the IRS
- Box 6: short-term or long-term. If it is blank and the “Applicable checkbox on Form 8949” box shows code X, the broker does not know the holding period, so use your own records.
- Box 9: checked for a noncovered security
- Boxes 12a and 12b: units that were transferred in, and the transfer-in date
Special rules: stablecoins, NFTs, staking, and more
The instructions (including the corrections to the 2025 instructions) set de minimis thresholds and optional reporting methods:
| Item | Rule |
|---|---|
| Qualifying stablecoins | Under the optional method, a broker does not have to report designated sales (for example, stablecoin to dollars) if the customer’s total for the year is $10,000 or less. Above that, sales are aggregated by stablecoin type. Swaps of a stablecoin for other non-stablecoin digital assets (non-designated sales) are not reported. |
| Specified NFTs | Under the optional method, no reporting if total gross proceeds for the year are $600 or less; above that, sales are aggregated on one 1099-DA. |
| PDAP sales | No reporting if the customer’s PDAP sales are $600 or less for the year. |
| Wrapping, liquidity provision, staking, lending, short sales, notional principal contracts | Under Notice 2024-57, no 1099-DA is required until further guidance. The exception does not apply to rewards or other compensation earned in these transactions. |
Not being reported is not the same as not being taxable. The IRS FAQs say you still recognize gain or loss on stablecoin swaps your broker did not report, and on NFT sales totaling less than $600, and you must report them (FAQs on digital asset transactions, Q100 and Q101).
Reconciling with Form 8949: new boxes G through L
The 2025 Form 8949 added boxes just for digital assets (Instructions for Form 8949). Do not use the old Box C or Box F for digital asset transactions.
| Holding period | 1099-DA, basis reported to IRS | 1099-DA, basis not reported | No 1099-DA |
|---|---|---|---|
| Short-term (Part I) | Box G | Box H | Box I |
| Long-term (Part II) | Box J | Box K | Box L |
- If you received a 1099-DA, always enter the proceeds it shows in column (d). If it shows that basis was reported to the IRS, enter that basis in column (e), and make any correction or adjustment in column (g).
- If every transaction had basis reported and needs no adjustment, you may be able to skip Form 8949 and report totals directly on Schedule D (Exception 1).
- Digital asset transaction costs, such as transaction and gas fees and commissions, reduce your amount realized on a sale. Fees to move assets between your own wallets are not transaction costs (FAQ Q53 and Q55).
Reconciliation checklist
- Collect the 1099-DA (or substitute statement) from each broker.
- Use Box 2 to sort transactions into Box G/J (basis reported) and Box H/K (basis not reported).
- For sales with no basis shown, calculate basis from your own records: acquisition date and time, number of units, and U.S. dollar value at acquisition.
- For units that were transferred in (Boxes 12a and 12b), use your purchase records from the original platform or wallet.
- Report sales with no 1099-DA (DeFi, foreign exchanges, stablecoin or NFT sales under the thresholds) using Box I or Box L.
- Answer the digital asset question at the top of Form 1040 correctly.
Wallet-by-wallet basis (Rev. Proc. 2024-28) and identifying the units you sell
For acquisitions and dispositions on or after January 1, 2025, basis is determined account by account (wallet by wallet) under Treasury Regulation section 1.1012-1(j). Before that, some taxpayers used a “universal” or “multi-wallet” approach, treating units sold from one wallet as if they came from another (FAQ Q93).
Rev. Proc. 2024-28 is a safe harbor for allocating unused basis to the units remaining in each wallet or account as of January 1, 2025.
- Specific unit allocation: you assign specific units of unused basis to units in each wallet or account. It must be completed before the earlier of your first sale, disposition, or transfer of the same type of digital asset on or after January 1, 2025, or the due date (including extensions) of your 2025 return.
- Global allocation: you apply a rule that allocates basis mechanically. The method had to be described in your books and records before January 1, 2025.
- Either way, the allocation is irrevocable.
If you already sold in 2025 or have filed your 2025 return, the deadline may have passed. If you use several exchanges or wallets and never made an allocation, talk to a tax professional soon.
Identifying which units you sold: 2025 vs. 2026 and later
| Where the units are held | 2025 transactions | 2026 and later |
|---|---|---|
| Broker custodial account | Under temporary relief in Notice 2025-07, you could identify units in your own books and records (including a standing order) before the sale | Tell the broker which units by the time of the sale, or set up a standing order with the broker. If the broker offers only one method, that method is treated as your standing order |
| Unhosted (self-custody) wallet | Identify the units in your own records by the time of the sale and keep adequate records | Same |
| No identification made | Units are treated as sold first-in, first-out within that wallet or account | Same |
(Notice 2025-07; FAQs Q82, Q85 to Q89, and Q92.) If you plan to sell part of a position in 2026, for example to realize a loss, set up your lot selection with the broker before you sell. Otherwise the sale is treated as first-in, first-out.
If you use Japanese exchanges or move between Japan and the U.S.
- Japanese crypto exchanges: generally only U.S. brokers file Form 1099-DA. If you are a U.S. resident trading on a Japanese exchange, calculate your gains and losses yourself and report them in Box I or Box L of Form 8949. Also check whether FBAR or Form 8938 applies to the foreign exchange account (see the related articles).
- Assets moved from Japan to a U.S. exchange: units transferred in are noncovered, so the broker will not report their basis. A broker may use acquisition information you provide to order the lots it sells, but not to report basis on Form 1099-DA (broker FAQ A3 and A7). Keep your Japanese purchase records.
- Moving between your own wallets: a transfer between wallets or accounts you own is not taxable, except for any digital assets used or withheld to pay the transfer fee (FAQ Q81).
Worked example: two sales on a U.S. exchange in 2026
Example: B, a U.S. resident, makes these sales in 2026 on a U.S. exchange that holds B’s assets. Amounts are hypothetical and ignore fees.
| Transaction | What the 1099-DA shows | Form 8949 | Gain or loss |
|---|---|---|---|
| Digital asset A bought in 2024 for $20,000, sold in June 2026 for $30,000 (held more than 1 year) | Proceeds $30,000. Acquired before 2026, so noncovered; no basis shown | Part II, Box K. (d) $30,000, (e) $20,000 from your records | Long-term +$10,000 |
| Digital asset B bought in February 2026 for $5,000, sold in September 2026 for $4,000 (held 1 year or less) | Proceeds $4,000, basis $5,000, Box 2 checked (covered) | Part I, Box G. (d) $4,000, (e) $5,000 | Short-term −$1,000 |
The long-term gain is $30,000 − $20,000 = $10,000, and the short-term loss is $4,000 − $5,000 = −$1,000. Because the 1099-DA does not show basis for asset A, B needs the 2024 purchase records.
FAQ
If I did not get a 1099-DA, do I still have to report the sale?
Yes. The IRS says you must report income, gain, or loss from all taxable digital asset transactions, regardless of the amount or whether you receive a payee statement or information return (FAQ Q108).
Will my staking rewards show up on a 1099-DA?
Under Notice 2024-57, brokers do not have to file 1099-DAs for staking transactions until further guidance. That exception does not extend to the rewards themselves, whose tax treatment you need to work out separately (see the related articles).
The proceeds on my 1099-DA do not match my records. What do I do?
Enter the proceeds shown on the 1099-DA in column (d) of Form 8949 and make any correction or adjustment in column (g), per the Form 8949 instructions. Keep records that explain the difference.
Will a broker apply backup withholding?
Under Notice 2024-56 and Notice 2025-33, brokers have relief from backup withholding for all transactions in 2025 and 2026. For 2027, relief continues only in certain cases, such as customers whose name and TIN match IRS records through TIN matching. Make sure your broker has your correct name and taxpayer identification number.
At CLT NY INC., an IRS Enrolled Agent prepares individual returns that include crypto gains and losses, in Japanese or English. Contact us.
Need help with your U.S. tax return?
An IRS Enrolled Agent who knows Japan-related filings (Japanese accounts, funds, foreign tax credit, dual-status years) prepares and signs your return. Answer a few questions and see your fee right away.
See your fee now →Individual tax returns →💬 Ask a question (AI or tax pro)
Takuya Yukimoto, IRS Enrolled Agent · Base fee from $600 · Apply, pay and upload documents online.
Related articles
- 2025 Edition: US Cryptocurrency Tax Basics! A Complete Guide to Form 8949 and Schedule D
- Integrating Coinbase & Binance Transaction CSVs for Accurate P&L Calculation: A Comprehensive Guide by a US Tax Professional
- Ultimate Crypto Tax Software Comparison: Koinly vs CoinTracker vs TaxBit – Which is Best for You?
- Tax Implications of Stablecoin (USDC/USDT) Exchanges and Redemptions in the US: Understanding Gains and Losses
- Do Foreign Exchange (e.g., Bybit) Crypto Assets Require FBAR/FATCA Reporting? Criteria to Avoid Penalties
- Cryptocurrency Taxation for Japanese Nationals Moving to the US: Unrealized Gains and Cost Basis Inheritance
Sources: IRS: Digital assets; IRS: About Form 1099-DA; Instructions for Form 1099-DA; Corrections to the 2025 Instructions for Form 1099-DA; IRS FS-2025-06; IRS: Frequently asked questions on digital asset transactions; IRS: Frequently asked questions about broker reporting; Instructions for Form 8949 (2025); Rev. Proc. 2024-28; Notice 2025-07. Information as of October 2026. This article provides general information and is not individual tax advice.
TAX PREPARER SWITCH CAMPAIGN
Switch your tax preparer and get 50% off your U.S. tax return this year.
Show us last year's invoice and we take 50% off the fee (up to $500, first year only). Prepared and signed by an IRS Enrolled Agent, in English or Japanese.
See the switch campaign →First time using a tax preparer? See our individual tax return service →