Form 1099-DA represents the most consequential structural change to U.S. crypto tax administration since the IRS first required taxpayers to disclose digital asset activity on Form 1040. The first mandatory filing season is now underway in 2026, covering transactions that occurred in calendar year 2025, and the data emerging from this rollout reveals a system that is simultaneously ambitious and materially incomplete. Gross proceeds are being reported. Cost basis is largely missing. 6 categories of common DeFi activity remain entirely outside the reporting framework. Non-custodial platforms are exempt. And a substantial portion of the taxpaying public remains uncertain about what counts as a taxable event in the first place.
At KoinX, we help investors and tax professionals automate crypto tax reporting across wallets, exchanges, and DeFi protocols, and the statistics compiled in this article reflect exactly why robust compliance infrastructure has become essential as the IRS begins receiving broker-reported data for the first time.
This article compiles statistics from government agencies, regulatory filings, blockchain analytics firms, exchange disclosures, and professional services research. It is organized into sections covering the regulatory and legislative foundation of Form 1099-DA, broker rollout data, coverage gaps and exemptions, enforcement trends, and investor behavior. Each statistic is drawn from a verifiable primary source. No statistics have been inferred, synthesized, or fabricated.
Scope and Methodology
This article was compiled under a strict primary-source-only framework. Every statistic included was drawn directly from a government agency, regulatory body, academic institution, or first-party exchange disclosure. Secondary sources, aggregator blogs, and media summaries of third-party data were excluded regardless of how widely cited they appeared.
Recency was enforced by limiting data to sources published within the 2 years preceding April 2026. Where older data appears, it is explicitly labeled with its original study year. The original study year is retained in every bullet regardless of publication date to ensure full traceability.
Geographic scope is U.S.-centric, reflecting the article topic. Form 1099-DA is a domestic IRS reporting instrument, and the enforcement and compliance statistics cited are drawn primarily from IRS, Treasury, TIGTA, GAO, and Congressional sources.
Source verification required that every URL resolve to the specific report, filing, regulatory notice, or dataset rather than a homepage or index page. Statistics that could not be verified at the primary document level were excluded.
Statistical integrity was maintained by reporting 1 data point per bullet and 1 source per bullet. No inference or interpretation was applied to any figure. All statistics appear as they were reported in the originating document.
A material limitation of this compilation is that Form 1099-DA aggregate compliance and matching data will not be available until future IRS statistical releases. The statistics here therefore reflect the regulatory framework, enforcement capacity, and behavioral data available through early 2026.
- The Joint Committee on Taxation estimated in 2021 that the digital asset broker reporting provisions of the Infrastructure Investment and Jobs Act would raise approximately $28 billion in additional federal tax revenue over 10 years, based on the 2021 Joint Committee on Taxation technical explanation.
- The IRS received more than 44,000 written comments in response to the proposed broker reporting regulations published in August 2023, based on the 2024 U.S. Department of the Treasury press release accompanying the final regulations.
- A 75% non-compliance rate was identified among taxpayers the IRS had located through records retrieved from digital currency exchanges, based on a 2023 IRS press release on compliance enforcement priorities.
- Between fiscal years 2018 and 2023, IRS Criminal Investigation saw a 113% increase in cases involving digital assets or virtual currency, according to the 2024 Treasury Inspector General for Tax Administration report on virtual currency tax compliance enforcement (Report Number 2024-300-030).
- Only 49% of 3,000 U.S. crypto users surveyed correctly identified when a taxable event occurs, according to the 2026 Coinbase and CoinTracker Crypto Tax Readiness Report conducted in late 2025.
- As of September 2025, over 80% of digital asset trade volume arose from custodial exchanges, which are the category of brokers subject to Form 1099-DA reporting, according to a 2025 article in The Tax Adviser.
- The IRS projected a gross tax gap of $696 billion for tax year 2022, with underreporting alone accounting for $539 billion (77%) of that total, based on IRS Publication 5869 Tax Gap Projections for Tax Year 2022, October 2024.
- Backup withholding obligations for digital asset brokers were deferred through calendar year 2026, with the earliest mandatory backup withholding date now January 1, 2027, based on IRS Notice 2025-33.
- IRS Criminal Investigation identified $10.59 billion in financial crimes in fiscal year 2025, a 15.7% increase from fiscal year 2024, with $4.5 billion of that total resulting from tax fraud (an increase of 111.8%), based on the IRS-CI FY2025 Annual Report.
- Only 8% of U.S. crypto users surveyed used crypto-specific tax services, even though 74% were aware digital assets are taxable and 65% had previously reported crypto activity, based on the 2026 Coinbase and CoinTracker Crypto Tax Readiness Report.
- The Infrastructure Investment and Jobs Act of 2021 (Public Law 117-58) amended Section 6045 of the Internal Revenue Code to require brokers to report digital asset transactions, based on the 2021 Congressional record and legislative text.
- Final regulations requiring custodial broker reporting of digital asset sales (Treasury Decision 10000) were published in the Federal Register on July 9, 2024, at 89 FR 56480.
- The 2024 final regulations apply to 4 categories of broker: operators of custodial digital asset trading platforms, certain hosted wallet providers, digital asset kiosks, and processors of digital asset payments (PDAPs), based on the 2024 IRS fact sheet FS-2024-23.
- Gross proceeds reporting on Form 1099-DA is required for all digital asset sales effected on or after January 1, 2025, while basis reporting for covered securities is mandatory for sales on or after January 1, 2026, based on the 2025 IRS Form 1099-DA Instructions.
- Real estate reporting persons who facilitate transactions in which buyers pay with digital assets must report the fair market value of such assets for closings occurring on or after January 1, 2026, based on the 2024 IRS final regulations.
- Form 1099-DA was excluded from the Combined Federal/State Filing Program for tax year 2025, based on an IRS announcement dated January 7, 2026.
- IRS Notice 2024-56, published in the 2024-29 Internal Revenue Bulletin, provided penalty relief for brokers making a good-faith effort to file Form 1099-DA accurately for 2025 transactions.
- IRS Notice 2024-57, also published in the 2024-29 Internal Revenue Bulletin, identified 6 categories of digital asset transactions for which brokers are not required to file until further guidance is issued.
- IRS Notice 2025-33, issued June 2025, extended and modified transitional relief from Notice 2024-56, deferring backup withholding obligations through calendar year 2026 and providing conditional relief for 2027.
- Revenue Procedure 2024-28 provided a transitional safe harbor allowing taxpayers to allocate units of unused basis to remaining digital asset units across wallets or accounts as of January 1, 2025.
Broker Rollout Timeline and Reporting Requirements
- For tax year 2025 (forms issued in early 2026), custodial brokers are required to report only gross proceeds on Form 1099-DA and are not required to report cost basis, based on the 2025 IRS Form 1099-DA Instructions.
- For sales of covered securities occurring on or after January 1, 2026, brokers must complete boxes reporting cost or other basis, gain or loss, and other basis-related fields on Form 1099-DA, based on the 2025 IRS Form 1099-DA Instructions.
- A digital asset is a covered security under Form 1099-DA only if it was acquired on or after January 1, 2026, and held continuously in the same broker account through sale, based on the 2025 IRS Form 1099-DA Instructions.
- Any digital asset acquired before January 1, 2026, or transferred into a broker’s custody from an external wallet or different platform, is treated as a noncovered security, meaning 0 basis reporting is required from the broker, based on the 2025 IRS Form 1099-DA Instructions.
- Coinbase began issuing Form 1099-DA for 2025 tax year transactions in early 2026, reporting only gross proceeds, with both proceeds and cost basis to be included on forms covering 2026 tax year transactions, based on Coinbase’s 2026 official tax documentation.
- Coinbase applies aggregated reporting for stablecoin transactions only when the aggregate annual amount exceeds $10,000; any amount below that threshold is not reported to the IRS, based on Coinbase’s 2026 tax guidance.
- The de minimis threshold for specified NFT broker reporting is $600 per year, meaning brokers are not required to file information returns for NFT sales below this amount, based on the IRS FAQ on digital asset transactions Part II updated 2025.
- The IRS FAQ on broker reporting, updated October 30, 2025, clarified that digital asset kiosks qualify as digital asset middlemen and are subject to information reporting obligations under Section 6045.
- The DeFi broker reporting rule (Treasury Decision 10021), which would have extended reporting obligations to non-custodial DeFi trading front-end service providers beginning January 1, 2027, was repealed by Congress via the Congressional Review Act signed in April 2025, based on The Tax Adviser’s November 2025 analysis.
- The IRS FAQ on digital asset transactions (Part II, FAQs 47 through 111) confirmed that FIFO is the default accounting method for all broker-reported digital asset dispositions on or after January 1, 2025, based on the IRS FAQ on digital asset transactions updated 2025.
Coverage Gaps, Exemptions, and Structural Reporting Limitations
- IRS Notice 2024-57 identifies 6 transaction categories exempt from information return reporting until further guidance: wrapping and unwrapping, liquidity provider transactions, staking, lending of digital assets, short sales, and notional principal contracts, based on the 2024-29 Internal Revenue Bulletin.
- Decentralized or non-custodial brokers that do not take possession of digital assets being sold or exchanged are excluded from the Form 1099-DA reporting framework under the 2024 final regulations, based on IRS digital assets guidance updated February 2026.
- Miners, node operators, software developers, and smart contract developers who indirectly facilitate digital asset transactions are not classified as brokers subject to Form 1099-DA requirements, based on the 2025 IRS Form 1099-DA Instructions.
- For tax year 2025, brokers are not required to report sales made to exempt foreign persons as defined in regulations section 1.6045-1(g)(4), based on the 2024 IRS final regulations (TD 10000) and the IRS fact sheet FS-2024-23.
- Staking rewards and income from staking are reported on Form 1099-MISC rather than Form 1099-DA and are outside the broker reporting framework established by the 2024 final regulations, based on The Tax Adviser’s March 2026 analysis.
- The number of types of virtual currency grew from 5,000 in April 2020 to more than 26,000 as of July 2023, a 420% increase, according to the TIGTA July 2024 report on virtual currency tax compliance enforcement (Report Number 2024-300-030).
- Bitcoin represented nearly 62% of the total cryptocurrency market capitalization as of June 11, 2024, while Bitcoin and Ether together accounted for over 82% of market capitalization among the 10 largest virtual currencies, according to the TIGTA July 2024 report on virtual currency compliance enforcement.
- Assets transferred between exchanges, across wallets, bridged across chains, or moved from self-custody to a custodial broker after acquisition appear as noncovered securities with 0 basis reporting required, based on The Tax Adviser’s March 2026 analysis.
Cost Basis Reporting Deferral and the Basis Gap
- For tax year 2025, brokers are not required to report cost basis, adjusted basis, or gain or loss information on Form 1099-DA, making basis reporting entirely voluntary for the 1st year of mandatory gross proceeds reporting, based on the 2025 IRS Form 1099-DA Instructions.
- Starting with tax year 2026, mandatory basis reporting applies only to covered digital assets acquired on or after January 1, 2026, and held continuously with the same broker through sale, based on the 2024 IRS final regulations (TD 10000).
- Only 35% of 3,000 U.S. crypto users surveyed had ever adjusted their cost basis, despite 71% having moved assets across wallets or exchanges, based on the 2026 Coinbase and CoinTracker Crypto Tax Readiness Report (survey: September to October 2025).
- Crypto investors surveyed by Coinbase and CoinTracker in 2025 held assets across an average of 2.5 platforms or wallets, with 83% using self-custodial wallets, complicating cross-platform cost basis tracking, based on the 2026 Coinbase and CoinTracker Crypto Tax Readiness Report.
- A broker may not rely on customer-provided acquisition information to report a customer’s basis on Form 1099-DA beyond what is permitted under regulations section 1.6045-1(d)(2)(ii)(B)(4), according to the IRS FAQ on broker reporting updated October 2025.
- IRS Notice 2025-7, issued December 31, 2024, provided temporary relief allowing taxpayers to use additional methods for identifying specific digital asset units sold in 2025 where brokers are unable to support specific identification, based on the IRS Notice 2025-7.
- Penalties for brokers who fail to file information returns correctly can reach $340 per return under IRC Section 6721 for failure to file, and $340 per payee statement under IRC Section 6722 for failure to furnish, with annual aggregate caps of $3,532,500, based on The Tax Adviser’s March 2026 analysis.
Investor Behavior and Compliance Awareness Statistics
- 74% of 3,000 U.S. crypto users surveyed were aware that digital assets are taxable, based on the 2026 Coinbase and CoinTracker Crypto Tax Readiness Report (survey: September to October 2025).
- 65% of U.S. crypto users surveyed had previously disclosed crypto activity in a prior tax filing, based on the 2026 Coinbase and CoinTracker Crypto Tax Readiness Report.
- Nearly 1 in 4 U.S. crypto users surveyed incorrectly believed that transferring crypto between wallets is a taxable event, based on the 2026 Coinbase and CoinTracker Crypto Tax Readiness Report.
- 47% of surveyed U.S. crypto users indicated they would use AI tools to calculate taxable income and capital gains, and 30% said they would rely on AI for the entire tax filing process, based on the 2026 Coinbase and CoinTracker Crypto Tax Readiness Report.
- 73% of 351 institutional investors surveyed planned to increase their crypto allocations in 2026, according to the 2026 EY-Parthenon and Coinbase institutional investor survey published March 2026.
- 2.7 million people in tax year 2022 checked the digital asset box on Form 1040 indicating they received, sold, sent, or exchanged crypto, according to the TIGTA July 2024 report on virtual currency tax compliance enforcement.
- Since tax year 2019, the IRS has required all filers of Forms 1040, 1040-SR, and 1040-NR to answer a digital asset question on their return, based on the 2024 IRS fact sheet FS-2024-12.
- The digital asset question was expanded in tax year 2023 to also appear on Forms 1041, 1065, 1120, and 1120-S, extending mandatory disclosure to estates, trusts, partnerships, and corporations, based on IRS FS-2024-12.
IRS Enforcement and Criminal Investigation Statistics
- IRS Criminal Investigation identified $10.59 billion in financial crimes in fiscal year 2025 (October 1, 2024, to September 30, 2025), a 15.7% increase from fiscal year 2024, based on the IRS-CI FY2025 Annual Report published December 11, 2025.
- Of the $10.59 billion identified in fiscal year 2025, $4.5 billion resulted from tax fraud, an increase of 111.8% from fiscal year 2024, based on the IRS-CI FY2025 Annual Report.
- IRS-CI saw a 25% increase in search warrants and a 14% increase in prosecution referrals to the Department of Justice in fiscal year 2025 compared to fiscal year 2024, based on the IRS-CI FY2025 Annual Report.
- The number of IRS-CI cases with a cyber component continued to grow in fiscal year 2025, with agents seizing 2.35 petabytes of digital data, a nearly 60% increase from fiscal year 2024, based on the IRS-CI FY2025 Annual Report.
- In fiscal year 2024, IRS-CI identified more than $9.1 billion in total fraud, obtained $1.7 billion in court-ordered restitution, and seized approximately $1.2 billion in criminal assets, based on the IRS FY2024 CI Annual Report.
- In fiscal year 2024, IRS-CI initiated more than 2,667 criminal investigations, obtained 1,571 convictions, and achieved a 90% conviction rate, based on the IRS FY2024 Criminal Investigation Annual Report.
- In fiscal year 2024, IRS-CI handled 111 cyber matters and seized assets worth approximately $925,728,496, based on the IRS FY2024 Criminal Investigation Annual Report.
- During fiscal years 2018 through 2023, IRS Criminal Investigation investigated 390 cases involving virtual currency or digital assets, of which 224 were recommended for prosecution, according to the TIGTA July 2024 report on virtual currency tax compliance enforcement.
- During fiscal years 2022 through 2024, 87.3% of IRS-CI criminal investigations recommended for prosecution had a primary subject with a related Bank Secrecy Act filing, and adjudicated cases resulted in a 97.3% conviction rate with average prison sentences of 37 months, based on the IRS-CI March 2025 BSA metrics release.
- During fiscal years 2022 through 2024, IRS-CI used Bank Secrecy Act data to identify $21.1 billion in fraud tied to tax and financial crimes and seize $8.2 billion in criminal assets, based on the IRS-CI March 2025 BSA metrics release.
Tax Gap and Digital Asset Compliance Rate Statistics
- The IRS projected a gross tax gap of $696 billion for tax year 2022, with a net compliance rate of 86.9% after accounting for approximately $90 billion in enforced and other late payments, based on IRS Publication 5869 Tax Gap Projections for Tax Year 2022, October 2024.
- Underreporting accounted for $539 billion (77%) of the $696 billion gross tax gap projected for tax year 2022, with underpayment contributing $94 billion (14%) and non-filing $63 billion (9%), based on the IRS October 2024 news release on tax year 2022 tax gap projections.
- Income subject to no third-party information reporting has the highest non-compliance rates, while income subject to both withholding and third-party reporting has near-perfect compliance, based on the GAO May 2024 report on IRS tax gap estimation (GAO-24-106449).
- The IRS established Operation Hidden Treasure to identify taxpayers who omit digital assets from their tax returns, but TIGTA found the program lacked specific enforcement deliverables for either criminal investigation or civil examination results, based on TIGTA’s July 2024 report on virtual currency compliance enforcement.
- TIGTA recommended in its July 2024 report that the IRS develop a compliance plan incorporating Form 1099-DA data for case identification and selection of digital asset cases, a recommendation the IRS agreed with.
- Individual income tax underreporting contributes $514 billion to the gross tax gap for tax year 2022, representing the single largest component of the gap, based on IRS Publication 5869.
- The IRS projects that $90 billion of the $696 billion gross tax gap for tax year 2022 will eventually be collected through enforcement and late payments, yielding a net tax gap of $606 billion, based on IRS Publication 5869 Tax Gap Projections for Tax Year 2022.
Penalty Relief, Transition Relief, and Backup Withholding Statistics
- The IRS will not impose penalties for failure to file and furnish Forms 1099-DA for 2025 transactions (reported in 2026) if the broker makes a good-faith effort to comply, based on IRS Notice 2024-56 published in the 2024-29 Internal Revenue Bulletin.
- Backup withholding of 24% on digital asset sales was not required for transactions effected in 2025 or 2026, with IRS Notice 2025-33 extending this deferral through calendar year 2026.
- Beginning January 1, 2027, brokers will be required to apply 24% backup withholding for customers who have not provided certified tax identification numbers, based on IRS final regulations (TD 10000) and IRS digital assets guidance updated February 2026.
- For digital asset sales in 2027, brokers may treat preexisting customers who had not previously been classified as U.S. persons and whose files reflect a non-U.S. address as exempt foreign persons without penalty, based on IRS Notice 2025-33.
- For 2027 backup withholding on digital asset-for-digital asset exchanges, the required withholding amount is capped at 24% of the proceeds from a liquidation of withheld assets rather than 24% of transaction value at the time of exchange, based on IRS Notice 2025-33.
- Accuracy-related penalties for underpayment attributable to digital asset misreporting are 20% of the understated tax amount under the Internal Revenue Code, based on IRS enforcement guidance.
- Civil fraud penalties for willful non-compliance with crypto tax reporting can reach 75% of the underpayment amount, based on IRS enforcement guidance.
- IRS Criminal Investigation uses investigation software that connects cryptocurrency transactions to real-world entities, enabling agents to trace blockchain activity in enforcement cases, based on the TIGTA July 2024 report on virtual currency compliance enforcement.
- The IRS Inflation Reduction Act Strategic Operating Plan for fiscal years 2023 through 2031 includes digital asset compliance as an enforcement priority, based on IRS Publication 3583 (Rev. 12-2025).
- Form 1099-DA will provide the IRS with a standardized data stream for matching reported proceeds against taxpayer-filed capital gains and losses on Schedule D and Form 8949, based on TIGTA’s September 2024 Semiannual Report to Congress on IRS compliance enforcement.
- The IRS has used John Doe summonses to compel digital asset exchanges to produce records identifying U.S. taxpayers who conducted transactions above certain thresholds, a mechanism operating independently of Form 1099-DA reporting, based on the IRS broker reporting FAQ updated October 2025.
- The digital asset question on Form 1040 has appeared since tax year 2019, requiring all taxpayers to disclose whether they received or disposed of digital assets during the tax year, based on IRS Tax Tip 2024-21 published March 2024.
Cost Basis Accounting Methods and Wallet-by-Wallet Requirements
- Beginning with tax year 2025, the IRS requires taxpayers to use a wallet-by-wallet (account-by-account) method for cost basis tracking, meaning cost basis must be attributed to the specific wallet or account in which a digital asset is held, based on IRS final regulations (TD 10000) as analyzed in the November 2025 issue of The Tax Adviser.
- FIFO is the default cost basis method for digital assets beginning January 1, 2025, unless taxpayers elect a different method such as specific identification, based on IRS digital assets guidance updated 2025.
- Taxpayers who previously used the universal method of cost basis allocation across all wallets were given a 1-time safe harbor under Revenue Procedure 2024-28 to transition, with the allocation required as of January 1, 2025.
- IRS Notice 2025-7, issued December 31, 2024, provided temporary relief allowing taxpayers to use additional methods beyond FIFO for adequate identification of digital asset units sold in 2025 where brokers cannot support specific identification.
- A broker may not report a customer’s basis using customer-provided acquisition information when that information relates to assets acquired outside the broker’s custody, based on the IRS FAQ on broker reporting updated October 2025.
References
![[object Object]](/_next/static/media/ISO_27001-2022_certification.ae776691.svg)
![[object Object]](/_next/static/media/GDPR_Compliance.a2dc5933.svg)
![[object Object]](/_next/static/media/SOC_2_Type_II_certification.dd69381e.svg)
