Digital asset exchanges and brokers have until the end of this year to be ready to add gross proceeds and cost basis to the 1099-DA to be send out in 2027. The 1099-DA for 2027 is a more detailed form than the one required for the 2026.
Digital assets are no longer considered fringe investments as traditional brokers are offing access to this new asset class. In the US, 30% of adults, or about 70 million people, own digital assets and 65-80% said they would use digital assets to pay for everything from daily purchases to real estate. This creates a significant number of transactions for brokers to track over 2026. These transactions are captured in the 1099-DA for the IRS and are to be mailed in January.
Adding sales and gross proceeds to a 1099-DA is a technological challenge. While everything written to the blockchain in irreversible, data must be captured at the time of the transaction. It is time-consuming and difficult to find transactions later.
This is also the first year where an exchange or broker needs to onboard and collect a customer’s W-9/W-8 with name, address, and TIN, something that the digital asset space typically did not collect previously. Those individuals without this information could be subject to a 24% backup withholding on future sale or exchange transactions.
Starting in 2027, exchanges and brokers are reporting crypto sales directly to the IRS. These 1099-DAs are matched against a taxpayer’s return, similar to how other investments are reported with a 1099. The IRS can compare an individual’s return against the 1099-DA from the broker. Mismatches could receive an automated notice.
It is a good idea for investors to continue to all track digital assets transactions as transfers between exchanges or wallets may lose the cost basis and the broker and investor used differ accounting methods to track proceeds. As a result, the broker 1099-DA might not match the investors records.
Is your firm prepared for the changes to take place in 2027?
Ledgible can help.
About Ledgible:
Ledgible is the enterprise digital asset tax, accounting, and data-reporting platform built for institutions, exchanges, custodians, and service providers. Ledgible transforms blockchain-native data into clear, compliant, and auditable records, enabling institutions to meet regulatory and reporting obligations while scaling digital asset operations with confidence.
