The IRS is proposing to eliminate the paper 1099-DA tax form and allow exchanges to terminate relationships with customers who refuse to accept the electronic form, impacting approximately 55 million Americans who hold digital assets.
The U.S. Internal Revenue Service ( IRS ) has proposed a new regulation aimed at digitizing the entire process of providing tax forms for cryptocurrency transactions. Under this regulation, exchanges will no longer be required to provide paper copies of Form 1099-DA – the form used to record cryptocurrency transactions occurring through a centralized exchange or broker – even if requested by the user.
The proposal , expected to be officially announced on Friday, also allows brokers to terminate relationships with clients who refuse to accept electronic forms, and prohibits users from withdrawing consent to electronic forms after having previously agreed. If approved, these regulations would take effect on January 1 of the calendar year following the issuance of the final regulation.
Under the current framework, all brokers – including platforms offering crypto asset services – are obligated to collect customer identifying information such as name and tax identification number (TIN), report total proceeds from each transaction, and provide users with Form 1099-DA for annual tax filing. Notably, exchanges are not required to track the cost basis of investments in the 2025 tax year – the responsibility for determining the price paid for each asset purchase remains with the investor.
The burden of tax compliance continues to be a barrier for 55 million digital asset users.
The scale of impact of these proposals is significant. According to the National Crypto Asset Association (NCA), approximately one in five Americans – equivalent to 55 million individuals – hold digital assets.
In an NCA survey of 54,000 participants, approximately 10% identified tax regulations as their primary concern, while over a third indicated they needed more information and guidance on the tax implications related to crypto assets. This suggests that the complexity of tax compliance remains a major barrier to the adoption of digital assets in the U.S.
The crypto tax policy landscape is far from static. In December 2024, the IRS issued a regulation classifying all user interface services – including decentralized exchanges (DEXs) and decentralized finance (DeFi) platforms – as brokers, requiring these platforms to collect KYC information and report user transaction revenue.
However, in April 2025, President Donald Trump signed a resolution repealing this regulation, a move positively received by the industry. But concerns remain: many leaders in the cryptocurrency sector warn that the unclear provisions in the stalled CLARITY market structure bill could reimpose KYC requirements on DeFi platforms and narrow the operating space of this Capital sector.
