The arrival of Form 1099-DA marked an important milestone for digital assets.
For the first time, brokers entered a dedicated federal information-reporting regime for digital asset transactions, with gross proceeds from reportable transactions beginning in 2025.
For many organizations, getting through that first reporting cycle represented a significant achievement.
It should not, however, be confused with the completion of the 1099-DA journey.
The next phase introduces a more consequential challenge: basis.
Proceeds Tell Only Half the Story
Gross proceeds answer a relatively straightforward question: what was received when an asset was sold or disposed of?
Basis requires an institution to understand much more about the history of the asset itself.
For covered digital assets acquired beginning in 2026, brokers may be responsible for reporting basis information when the relevant requirements apply.
That moves digital asset information reporting deeper into the transaction lifecycle.
An institution may need to understand how and when an asset was acquired, whether it is covered or noncovered, the appropriate basis associated with it and how subsequent activity affects the information ultimately reported to the taxpayer and IRS.
This is where digital asset reporting becomes less about generating forms and more about maintaining continuity of data.
Basis Exposes the Cost of Fragmentation
Financial institutions have spent years building sophisticated systems around traditional assets. Cost basis, tax lots and transaction histories are established components of the financial infrastructure surrounding equities and other securities.
Digital assets introduce a different architecture.
Activity can occur across platforms. Assets can move between wallets. Transactions may involve digital asset-for-digital asset exchanges rather than a simple purchase or sale for cash. Data may originate from systems built for trading, custody or blockchain activity rather than tax reporting.
The result is fragmentation.
During a proceeds-only reporting cycle, some of that fragmentation can remain hidden.
Basis has a tendency to expose it.
If acquisition information cannot be reliably associated with a later disposition, the challenge is no longer confined to tax operations. It becomes a question of whether the institution has sufficient continuity across its digital asset data.
The Operating Model Matters
This is why executives should look beyond whether their organizations can technically comply with the next reporting requirement.
The more useful question is how compliance is being achieved.
Is the institution relying on manual reconciliation?
Are tax teams receiving normalized data, or are they assembling it themselves?
Can reporting logic be applied consistently across different digital asset products?
Can operations teams identify exceptions before reporting deadlines?
Can the organization trace reported information back to source transactions?
These questions reveal whether an institution has built a scalable reporting capability or simply a process capable of surviving one filing season.
The distinction becomes increasingly important as transaction volumes grow.
1099-DA Is Becoming a Data Governance Issue
Basis reporting also changes the executive conversation because it extends the lifecycle of information.
A transaction occurring today may affect reporting decisions much later. That means acquisition data cannot simply exist somewhere within the organization. It must remain accurate, accessible and connected to subsequent activity.
That is fundamentally a data governance challenge.
Organizations need clear ownership over digital asset tax data, consistent standards for how it is normalized and retained, and infrastructure capable of preserving the relationships between transactions.
Those capabilities are useful well beyond tax.
They improve reconciliation. They strengthen controls. They create better visibility into digital asset operations.
And they make it easier for institutions to introduce new digital asset products without creating another isolated compliance workflow.
The Institutions That Learn Fastest Will Have an Advantage
The first 1099-DA season provided the industry with something valuable: operational experience.
Financial institutions now have an opportunity to examine where data was difficult to obtain, where manual intervention was required and where reporting processes depended on systems that were never designed to communicate with one another.
Those lessons should shape the next phase of investment.
Because the objective should not simply be to make next year's filing process easier.
It should be to build a reporting architecture that becomes more capable with every reporting cycle.
The first 1099-DA forms represented an important milestone.
The institutions that treat them as the beginning rather than the end will be better positioned for everything that follows.
