A Revolution in the Granularity of Digital Asset Tax Regulation: An Analysis of the US 1099-DA Form

1 Introduction

As crypto assets move from the fringe to the mainstream, the global tax regulatory "net" is being rapidly woven. Following the official release of the 2025 version of the Digital Asset Broker Information Reporting Form (Form 1099-DA, or 1099-DA for short) and its accompanying operational guidelines, the U.S. Internal Revenue Service (IRS) recently updated two detailed rules. This move not only clarifies the mandatory reporting obligations of digital asset brokers, but also refines the exemption threshold for de minimis transactions through supplementary rules, and innovatively provides optional reporting methods for stablecoins and specified non-fungible tokens.

2 Tracing the Origins: Content and Background of Form 1099-DA

2.1 Overview

Form 1099-DA is an information reporting form used by digital asset brokers to report profits and losses from digital asset transactions to the IRS and their clients.

The 1099-DA is not a patch to the old system, but a special reporting form designed specifically for the inherent characteristics of digital assets. According to the latest instructions for Form 1099-DA (2025), starting January 1, 2025, brokers must record and report the gross proceeds for each transaction. It is noteworthy that the IRS will not mandate reporting the cost basis and profit/loss nature in 2025, but will grant brokers a grace period for voluntary reporting, and explicitly states that no penalties will be imposed for reporting errors during this period. The mandatory reporting obligation regarding cost basis and profit/loss nature has been postponed to 2026 (for "covered digital assets" acquired after January 1, 2026), providing brokers with a one-year system debugging period in the form of a transition period to resolve historical issues such as difficulties in confirming ownership of on-chain assets and tracing costs. Furthermore, the latest 1099-DA guidelines also propose more refined requirements for the granularity of data reporting, mainly reflected in two dimensions: first, the "uniqueness" of asset identity, that is, eliminating ambiguity in token naming by introducing standardized DTIF (Digital Token Identifier Foundation) identification codes; second, the "structuring" of transaction nature, that is, separating the original minting proceeds (Primary Sale) from investor circulation profits and losses through isolated reporting of specific asset flows. Specifically, through the newly added Box 11c, the IRS, for the first time, segregated the reporting of original minting proceeds for designated NFT creators from secondary market transfer gains and losses for investors, resulting in more refined reporting data received by the IRS. Digital Assets: According to 1099-DA, a digital asset refers to any value represented in digital form and recorded on a cryptographically protected distributed ledger (such as blockchain or any similar technology), regardless of whether each specific transaction involving the digital asset is actually recorded on that distributed ledger; furthermore, the asset is not cash (i.e., not US dollars or any convertible foreign currency issued by a government or central bank). Therefore, the IRS's definition of digital assets is extremely broad, encompassing any digital representation of value recorded on a cryptographically protected distributed ledger, including cryptocurrencies, tokenized securities, and designated NFTs. Qualifying Stablecoins: A digital asset is considered a qualified stablecoin if it meets the following three conditions: (1) The digital asset is designed to track a single convertible currency (including the US dollar) issued by a government or central bank at a 1:1 ratio; (2) The digital asset employs an effective stabilization mechanism; (3) The digital asset is generally accepted as a means of payment by entities other than the issuer. Regarding the reporting entities, 1099-DA primarily targets brokers and digital asset intermediaries. Brokers: According to the revised provisions of the Implementing Regulations of Article 6045 of the Internal Revenue Code, a broker refers to any person who, in the course of their ordinary business, is prepared to execute digital asset sales for others. In the sale of digital assets, a person is considered a broker if he/she meets the following conditions: (1) regularly proposes that clients redeem digital assets created or issued by him/her; or (2) acts as an agent, dealer or digital asset intermediary to dispose of clients' digital assets. Digital Asset Middleman: A person who provides services to facilitate the sale of digital assets and who has the knowledge of the seller's identity and the nature of the transaction. A person is considered a digital asset intermediary if they meet the following criteria: (1) accepting or processing digital assets as a means of payment for stocks, commodities, regulated futures contracts, securities futures contracts, forward contracts, foreign currency contracts, debt instruments, options, or securities futures contracts; (2) being a real estate reporting person who actually knew or should normally have known that the real estate buyer used digital assets for payment; (3) accepting digital assets as remuneration for brokerage services; (4) Owning or operating one or more digital asset vending machines; or (5) Digital asset payment processor (PDAP). The following are not considered digital asset intermediaries: (1) Only providing proof-of-work (PoW) or proof-of-stake (PoS) distributed ledger verification services (staking/mining) and not providing other functions or services; or (2) Only providing hardware or software (through sales, licensing or other means) that allows users to control private keys to access digital assets on the distributed ledger (such as non-custodial wallets) and not providing other functions or services. In summary, digital asset intermediaries not only include traditional CEXs (centralized exchanges), but also extend to custodian wallet providers, payment processors (PDAPs), and digital asset kiosk operators. To intuitively understand the uniqueness of 1099-DA, the table below compares it with filing forms in the traditional financial and payment sectors. form 1099-DA

Form 1099-B

Form 1099-K

Main Regulated Targets

Digital Assets

Stocks, Bonds, and Securities

Third-Party Online Payment and Settlement

Total Revenue Per Transaction

Capital Gains and Cost Base

Total Annual Transaction Amount

Payment Exemption Threshold

$600(for PDAP)

$10000(for eligible stablecoins)

$600(for NFTs)

Not Applicable

Settlement Threshold Changes with Policy

Legal Basis

IIJA2021 & TD 10000

Domestic Tax Code

Domestic Tax Code

2.2 Core Content

The 1099-DA table structure is similar to the traditional securities 1099-B, but several detailed boxes have been added for encryption features:

• Box 1a & 1b (Digital Asset Code and Name): DTIF coding is mandatory. If a token does not have a DTIF code, it must be marked with "999999999" (alphanumeric identifier). If the optional aggregation reporting method for specified NFTs is used, Box 1a also requires "999999999", and Box 1b requires "Specified NFTs". If the optional aggregation reporting method for eligible stablecoins is used, Box 1a requires the DTIF identifier of the stablecoin, and Box 1b requires the stablecoin name. Box 1f (Total Amount Received): This may include the fair value of cash and services received, digital assets, or other property.

• Box 1g (Cost Basis):Although voluntary in 2025, it will become the core of profit and loss calculation in the future.

• Box 11a & 11b (Summary Reporting Markers):Special paths designed for stablecoins and designated NFTs, recording whether optional reporting methods were used and the number of transactions covered.

• Box 11a & 11b (Summary Reporting Markers):Special paths designed for stablecoins and designated NFTs, recording whether optional reporting methods were used and the number of transactions covered.

• Box 11c (Primary Market Sale):Specifically designed to capture the original proceeds of a designated NFT creator during the minting phase, distinguishing it from secondary market transfers.

2.3 Background of Form 1099-DA

2.3.1 Within the United States

In August 2021, the Infrastructure Investment and Jobs Act (IIJA) was passed by the Senate and signed into law in November of the same year. The bill amends Section 6045 of the Internal Revenue Code, explicitly including "digital assets" within the legally defined scope of "brokerage" reporting, aiming to improve tax transparency through a third-party automatic reporting system. After two years of professional consultation and public discussion of policy details, on July 9, 2024, the U.S. Treasury Department and IRS officially released Treasury Decision 10000 (Gross Proceeds and Basis Reporting by Brokers and Determination of Amount Realized and Basis for Digital Asset Transactions), abbreviated as TD 10000. This regulation took effect on September 9, 2024, precisely defining the constituent elements of a brokerage firm from a legal perspective, clarifying the types of transactions that must be reported, and detailing the methods for calculating the cost basis. TD 10000 stipulates that 1099-DA will be officially implemented in 2026. Each section of the 1099-DA is legally supported by TD 10000, requiring brokers to report basic information on digital asset revenue and costs starting January 1, 2025. 2.3.2 Outside the United States It is worth noting that the introduction of 1099-DA is not only a unilateral upgrade of domestic digital asset tax regulation in the United States, but also echoes the global trend of tax transparency. In late 2022, the Organization for Economic Cooperation and Development (OECD) officially released the Crypto-Asset Reporting Framework (CARF), aiming to establish a globally unified standard for the automatic exchange of tax information on crypto assets. On November 10, 2023, the United States and more than 40 countries issued a joint statement pledging to accelerate the implementation of the CARF framework. On July 30, 2025, the United States released a digital asset status statement proposing the implementation of CARF. On November 14, 2025, the IRS submitted a proposal to the White House for the US Broker Digital Transaction Reporting (CARF), aiming to implement CARF; the White House is currently reviewing the proposal. If the United States implements CARF, it will allow the IRS to obtain key information on overseas cryptocurrency accounts held by US tax residents and use this information to conduct tax audits. Although the United States has not yet signed the CARF multilateral agreement, nor has it initiated automatic exchange of tax data on crypto assets with other jurisdictions under CARF, the official launch of 1099-DA signifies that the United States has taken the lead in building a mature underlying data collection system, laying the technological foundation for future automatic exchange of tax data with other countries. Following the Trend: Recent Policy Interpretation of US 1099-DA Recently, the IRS has significantly accelerated its regulatory pace on crypto assets. According to its newly released detailed rules, its policy output is no longer limited to macro-level compliance requirements, but has developed into specific standards with enforceability and efficiency.

3.1 Details on De Minimis Exemptions and Summary Reporting

While maintaining strict supervision, the IRS has demonstrated a certain degree of flexibility in the new regulations. Through the nesting and layered filtering of De Minimis Rules and optional reporting methods, a system for reducing the burden has been formed to avoid regulatory redundancy. The specific operation is as follows: Brokers first determine whether the transaction is eligible for the "optional reporting method" based on the nature of the asset. Once the optional reporting method is selected, the IRS assigns a corresponding "small exemption threshold." Only when the transaction amount exceeds this specific threshold is it necessary to fill out and submit Form 1099-DA according to the rules of the optional method; otherwise, reporting is exempted. The optional reporting method determines "how to report": For qualified stablecoins with extremely low value volatility and designated NFTs with consumption attributes, under the condition of meeting the optional reporting method, the new rules allow brokers to simplify or exempt transactional reporting and instead use aggregate reporting. Small Amount Exemption Rules Determine "Report or Not": To avoid undue impact on the tax audit system from massive amounts of retail consumer data (such as using cryptocurrency to buy coffee, everyday small payments, etc.), the IRS has set differentiated small amount exemption thresholds for different transaction types and reporting methods: Digital Asset Payment Processors (PDAP) Sales Threshold: $600 If a Digital Asset Payment Processor (PDAP) processes no more than $600 in total payments or related transactions for the same customer within a year, it is not required to file Form 1099-DA.

• Eligible Stablecoin Optional Reporting Threshold: $10,000

For eligible stablecoins that are aggregated and reported using the optional reporting method, if a client's total designated sales revenue (after deducting relevant transaction costs) at the brokerage firm does not exceed $10,000 for the entire year, the brokerage firm may exempt the client from reporting.

• Optional reporting threshold for designated NFTs: $600

For designated NFT transactions that are aggregated and reported using the optional reporting method, if the total revenue from all designated NFT sales (after deducting transaction costs) of a client at a brokerage firm throughout the year does not exceed $600, the brokerage firm may exempt the client from reporting.

• For designated NFT transactions that are aggregated and reported using the optional reporting method, if the total revenue from all designated NFT sales of a client at a brokerage firm throughout the year does not exceed $600, the brokerage firm may exempt the client from reporting.

For designated NFT transactions that are aggregated and reported using the optional reporting method, if the total revenue from all designated NFT sales of a client at a brokerage firm throughout the year does not exceed $600, the brokerage firm may exempt the client from reporting.

• Optional reporting threshold for designated NFT transactions: $600Optional reporting threshold for designated NFT transactions: $600