Crypto Brokers to Begin Reporting Digital Asset Sales in 2026 – Potentially Generating $28B in Tax Revenue
In an effort to combat tax evasion risks associated with digital assets, crypto brokers will be required to report their customers’ digital asset sales and exchanges starting in 2026. This move is expected to generate nearly $28 billion in tax revenue over the course of ten years, according to the Joint Committee on Taxation.
Under the proposed regulations, both centralized and decentralized crypto exchanges, payment processors, and certain hosted wallets will be obligated to provide a new tax reporting form called Form 1099-DA. This form will assist taxpayers in determining their tax obligations by providing information about their capital gains and losses related to digital assets such as Bitcoin, Ether, and even non-fungible tokens (NFTs).
The Form 1099-DA will be sent to both customers and the Internal Revenue Service (IRS), aligning the reporting requirements for crypto with those of securities and other financial instruments. This standardized approach aims to enhance transparency and ensure accountability in the taxation of digital assets.
These new regulations mark a significant development in the taxation of the rapidly growing cryptocurrency market. By requiring crypto brokers to report digital asset transactions, tax authorities aim to capture previously unreported taxable activities, ultimately bolstering government revenue.
While some may argue that these measures infringe upon the privacy and decentralization principles that underpin the crypto industry, proponents of the regulations highlight the importance of addressing potential tax evasion risks. The increased regulation is seen as a step towards ensuring that individuals and companies within the crypto space contribute their fair share to government coffers.
However, the implementation of these reporting requirements will not take effect until 2026. This timeframe is intended to allow ample time for crypto brokers and taxpayers to familiarize themselves with the new obligations and make any necessary adjustments to their systems and practices.
In conclusion, the introduction of reporting requirements for crypto brokers represents a significant milestone in the taxation of digital assets. By aligning the reporting rules for crypto with securities and other financial instruments, these regulations aim to tackle tax evasion risks and generate substantial tax revenue. This move highlights the growing recognition and integration of cryptocurrencies into the global financial landscape.
