Section 6045(f): Digital Asset Broker Rules and Form 1099-DA

The digital asset broker reporting rules require custodial exchanges, hosted wallet providers, and digital asset payment processors to report their customers’ sales and exchanges of cryptocurrency and other digital assets to the IRS on Form 1099-DA. Gross proceeds reporting applies to transactions in 2025; cost basis reporting becomes mandatory for assets acquired on or after January 1, 2026. One point worth clearing up at the start: the rules are not found in Section 6045(f), which governs payments to attorneys. Digital asset reporting lives in Section 6045(a), the broker definition in Section 6045(c)(1)(D), and the digital asset definition and basis rules in Section 6045(g)(3), all added or expanded by the Infrastructure Investment and Jobs Act of 2021.¹²

Who Counts as a Digital Asset Broker

Under the expanded definition in Section 6045(c)(1)(D), a broker includes any person who, for consideration, regularly provides services effectuating transfers of digital assets on behalf of another person.¹ The IRS defines a digital asset as any digital representation of value recorded on a cryptographically secured distributed ledger or similar technology, which covers cryptocurrencies like Bitcoin and Ethereum, stablecoins, and many non-fungible tokens.³

The Treasury Department finalized regulations in July 2024 requiring custodial brokers and brokers acting as principals to report digital asset transactions.⁴ In practice that means centralized trading platforms, custodial wallet providers that hold private keys for users, and digital asset payment processors. The common thread is control over customer assets paired with access to customer identity information.

Non-custodial participants were deliberately left out. A separate rule finalized in late 2024 would have classified certain decentralized finance front-end service providers as brokers, but Congress repealed that rule under the Congressional Review Act and President Trump signed the repeal into law. The repeal also prohibits a future administration from issuing a similar rule without new legislation.⁵ So purely non-custodial software providers, hardware wallet manufacturers, and validators involved in mining or staking are not brokers. A trade through a decentralized exchange with a non-custodial interface generates no broker report.

What Goes on Form 1099-DA

Form 1099-DA, Digital Asset Proceeds From Broker Transactions, is the designated form.⁶ It reports sales, exchanges, and other dispositions. It does not report a simple transfer of an asset to a personal wallet. Moving Bitcoin from a centralized exchange to your own hardware wallet is not a taxable event and does not trigger a 1099-DA.

Each form carries the customer’s name, address, and taxpayer identification number, the type and quantity of digital asset sold, the date of the transaction, and the gross proceeds. The broker also indicates whether the asset was a covered or noncovered security, which determines whether cost basis appears.⁷

When a customer sells digital assets that were previously transferred into the broker’s account from somewhere else, the form captures that history too. Box 12a records the number of units transferred in, and Box 12b records the date of that transfer.⁷ Those fields help the IRS and the taxpayer separate assets purchased on the platform from assets that arrived from an outside source.

When the Rules Take Effect

The IRS is phasing the requirements in rather than switching everything on at once.

For 2025 transactions, brokers must report gross proceeds from digital asset sales. Cost basis reporting is voluntary.⁷
For 2026 transactions and beyond, gross proceeds and cost basis reporting are both mandatory for covered securities. Basis reporting for noncovered securities stays voluntary.⁷

A covered security, for digital assets, generally means an asset acquired on or after January 1, 2026, through a transaction in the same broker account where it’s held. Assets purchased before 2026, or transferred in from an outside wallet, are noncovered. Expect many Forms 1099-DA to show proceeds without basis. That does not relieve the taxpayer of reporting the correct basis on the tax return.

Transfers Between Brokers

Section 6045A normally makes a transferring broker send a statement with cost basis information to the receiving broker when a security changes hands. For stocks and bonds, that process works. For digital assets, the Treasury concluded in its final regulations that transfers should generally be exempt, stating that “it is unclear at this point how digital asset brokers would be able to provide the necessary information to make basis reporting work efficiently” for broadly tradeable digital assets.⁴

The gap matters. Move Bitcoin from one exchange to another and the receiving exchange has no duty to pull your cost basis from the sender; it will treat the transferred coins as noncovered. Keep your own records of acquisition dates and prices for anything you shift between platforms.

Filing Deadlines

Brokers filing Form 1099-DA follow the same calendar as other information returns. For tax year 2025 transactions reported in 2026:

Electronic filing with the IRS is due March 31, 2026.
Paper filing with the IRS is due February 28, 2026, which falls on a Saturday and shifts to March 2, 2026.
The customer statement must be furnished by February 15, 2026, which falls on a Sunday and shifts to February 17, 2026.⁸

Any broker required to file ten or more information returns during the calendar year must file electronically.⁹ The threshold counts all information return types in the aggregate, not just 1099-DAs, so almost every digital asset platform will be an e-filer.

Backup Withholding

When a customer fails to provide a certified TIN, or when the name and TIN don’t match IRS records, a broker generally must withhold 24% of reportable proceeds and send it to the IRS. The IRS has granted transition relief for digital assets. Brokers are not required to perform backup withholding on digital asset sales during 2025 or 2026, even if no certified TIN has been collected.

Starting in 2027, the grace period ends. For accounts opened before January 1, 2026, a broker can avoid backup withholding by running the existing customer name-and-TIN combination through the IRS TIN Matching Program. A confirmed match clears the account for 2027. Accounts that fail to match, or where the customer never provided a TIN, trigger 24% withholding on sale proceeds. Collecting certified TINs through Form W-9 during the transition period is the cheaper path.

Penalties for Noncompliance

Brokers that fail to file correct returns with the IRS or furnish correct statements to customers face per-return penalties that climb with delay. The IRS assesses them separately for each missing or incorrect return and each missing or incorrect customer statement, so the exposure for a platform with thousands of accounts adds up fast.¹⁰

For returns due in 2026:

Corrected within 30 days of the due date: $60 per return.
Corrected after 30 days but by August 1: $130 per return.
Filed after August 1, or not filed at all: $340 per return.
Intentional disregard: $680 per return, with no maximum cap.¹⁰

Annual caps apply to the first three tiers and scale with business size, with higher ceilings for businesses whose average annual gross receipts exceed $5 million.¹¹ Intentional disregard has no ceiling at any size.

Reasonable Cause Waivers

A broker can request a waiver by showing the failure was due to reasonable cause and not willful neglect. The standard is not casual. The broker must demonstrate either that significant mitigating factors existed or that the failure arose from events beyond its control, and must also prove it acted in a responsible manner both before and after the failure. Acting responsibly means exercising the standard of care a reasonably prudent person would use, taking significant steps to prevent the failure, and rectifying it promptly once discovered. The IRS treats a correction as prompt if it happens within 30 days of discovery.¹²

Documentation is what wins waivers: written policies, system audits, TIN solicitation records, and prompt correction of errors once identified. A broker that ignored the requirements and hoped for the best will not qualify, and that is the scenario the intentional disregard penalty was built for.

1
Office of the Law Revision Counsel. 26 USC 6045 – Returns of Brokers
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Internal Revenue Service. Frequently Asked Questions About Broker Reporting
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Internal Revenue Service. Digital Assets
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Federal Register. Gross Proceeds and Basis Reporting by Brokers and Determination of Amount Realized and Basis for Digital Asset Transactions
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U.S. House of Representatives. Carey Bill to Eliminate Burdensome IRS DeFi Crypto Broker Rule Signed Into Law by President Trump
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Internal Revenue Service. About Form 1099-DA, Digital Asset Proceeds From Broker Transactions
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Internal Revenue Service. Instructions for Form 1099-DA (2025)
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Internal Revenue Service. 2025 General Instructions for Certain Information Returns
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Internal Revenue Service. E-file Information Returns
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Internal Revenue Service. Information Return Penalties
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Internal Revenue Service. Information Return Penalties
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eCFR. 26 CFR 301.6724-1 – Reasonable Cause