Compliance
Compliance Checklist: Digital Assets Reporting Changes You Can’t Ignore in 2025/2026
New rules around digital assets, Form 1099-DA, and broker reporting are shifting the compliance landscape—this guide helps you avoid common pitfalls.
By NomadicTax Research Team • 5-8 min read • February 23, 2026
## Overview of Recent Changes
Ongoing regulatory updates now require **brokers** and taxpayers to report transactions involving **digital assets**—including cryptocurrencies, stablecoins, NFTs—and to use **Form 1099-DA**. These changes affect both how income must be reported and the detail that must be kept. ([irs.gov](https://www.irs.gov/newsroom/final-regulations-and-related-irs-guidance-for-reporting-by-brokers-on-sales-and-exchanges-of-digital-assets?utm_source=openai))
## What’s Required for Brokers
- Brokers must file **Form 1099-DA** for transactions beginning **January 1, 2025**, reporting **gross proceeds** from sales, exchanges, or dispositions of digital assets. Basis reporting kicks in beginning **January 1, 2026** for certain transactions. ([irs.gov](https://www.irs.gov/newsroom/final-regulations-and-related-irs-guidance-for-reporting-by-brokers-on-sales-and-exchanges-of-digital-assets?utm_source=openai))
- For real estate transactions with digital asset payments, brokers must report fair market value when certain thresholds are met. ([irs.gov](https://www.irs.gov/newsroom/final-regulations-and-related-irs-guidance-for-reporting-by-brokers-on-sales-and-exchanges-of-digital-assets?utm_source=openai))
- Backup withholding requirements begin for certain transactions if details like TIN and payer details are missing. Notices provide transition relief so penalties may be waived under some conditions. ([irs.gov](https://www.irs.gov/newsroom/final-regulations-and-related-irs-guidance-for-reporting-by-brokers-on-sales-and-exchanges-of-digital-assets?utm_source=openai))
## What Taxpayers Must Do
- Report all digital asset income—**whether or not** you receive Form 1099-DA. This includes gains, losses, rewards, income for services, staking, etc. ([irs.gov](https://www.irs.gov/newsroom/reminders-for-taxpayers-about-digital-assets?utm_source=openai))
- Answer the digital assets question on your Form 1040: Check “yes” if you received, sold, exchanged, or disposed of any such asset. Missing this can raise compliance risks. ([irs.gov](https://www.irs.gov/newsroom/reminders-for-taxpayers-about-digital-assets?utm_source=openai))
- Maintain accurate records of **basis**, dates of acquisition, and holding location (wallet/account) per safe-harbor rules. A safe harbor under Revenue Procedure 2024-28 aids by-wallet/allocation reporting before filing. ([irs.gov](https://www.irs.gov/newsroom/final-regulations-and-related-irs-guidance-for-reporting-by-brokers-on-sales-and-exchanges-of-digital-assets?utm_source=openai))
## Common Pitfalls & How to Avoid Them
| Pitfall | Why It Matters | How to Avoid |
|---|---|---|
| Ignoring Form 1099-DA | You might miss gross proceeds that the IRS already sees | Regularly review all income statements, even for small or past transactions |
| Weak Documentation of Basis | Without basis, gains get taxed as if basis is zero | Use exchanges’ reports, personal records, safe-harbor allocations to establish basis |
| Misreporting Wallet Transfers | Transfers between your own wallets may not be taxable—but fees or other transactions may be |
| Not participating in TIN matching or missing info | Broker penalties or missing withholding requirement can catch you off guard |
## Example Scenario
Alex buys Bitcoin in 2023 worth $500, and holds it in two wallets. In 2025, he sells in a single wallet for $1,500. The gross proceeds must be reported by broker via 1099-DA. Beginning 2026, basis reporting is required for certain transactions—and Alex must have properly tracked cost basis, wallet ownership, etc. Failure to do so may lead to IRS correspondence, penalties, or audit.
## Action Steps Before Filing
- Collect any Forms 1099-DA by February deadlines. Brokers must furnish them to taxpayers by **February 17, 2026**. ([irs.gov](https://www.irs.gov/newsroom/reminders-for-taxpayers-about-digital-assets?utm_source=openai))
- Answer the digital asset checkbox on Form 1040 and review Form 8949 where required to disclose gain/loss.
- If using safe-harbor under Revenue Procedure 2024-28, document allocation of cost basis by wallet or account (no longer universal method). ([irs.gov](https://www.irs.gov/newsroom/final-regulations-and-related-irs-guidance-for-reporting-by-brokers-on-sales-and-exchanges-of-digital-assets?utm_source=openai))
## Conclusion
Digital asset reporting is no longer optional—it is central to compliance in the post-2025 tax environment. Brokers are now deeper into regulatory obligations, and taxpayers must be proactive about record-keeping, reporting, and understanding what is being reported. Avoid pitfalls and leverage safe-harbor pathways to stay compliant.