Overview of the Proposed Rule
The Treasury Department and IRS recently issued proposed regulations under REG-105064-25 to simplify how digital asset brokers furnish 1099-DA statements. Under the current rules, brokers must provide a paper 1099-DA unless a customer affirmatively consents to electronic delivery. The new proposal would allow brokers to require that consent without offering a paper alternative, potentially eliminating the burden of printing and mailing statements to customers who transact entirely online. (irs.gov)
Key Changes Under Proposed Regulations
- Consent can be obtained via pop-ups or website/mobile app interfaces, not just paper-based methods. (irs.gov)
- Brokers must provide notice if hardware/software changes might prevent customers from accessing the statement. If so, new consent is required. (irs.gov)
- For transactions happening on or after January 1, 2027, brokers will be able to opt into this electronic-furnished model if the proposed rule is finalized. (irs.gov)
Actionable Insights: What Brokers and Customers Should Do Now
For Brokers:
- Audit your technical infrastructure: ensure website and app platforms can securely deliver 1099-DA statements, with user authentication and long-term access.
- Build consent flows: design clear, compliant consent prompts explaining that electronic delivery means customers may lose paper statements.
- Prepare for a longer retention period of electronic statements and mechanisms for customer access or requests.
For Customers:
- If you trade digital assets, monitor communications from your broker for any consent request. Understand what you're signing up for.
- Keep copies of your 1099-DA statements, especially when your assets are in real property or when basis reporting applies.
- Pay attention to changes in hardware/software to ensure continued access. If something changes, you may need to reassert consent.
Examples:
- High-volume crypto trader: It may no longer be worth having paper 1099-DA forms. A digital platform under the new rules could shift to all-electronic delivery if you agree.
- Rare investor with spot-digital real estate transactions: You’ll still get reporting on fair market value for real property paid in digital assets starting in 2026. (irs.gov)
Caveats & Timeline
- These rules are proposed, not yet finalized. Comments were due by May 5, 2026, under the public rulemaking process. (irs.gov)
- If not finalized, current paper/electronic hybrid rules continue.
- Must comply with enhanced consumer protection: consent, notice, access, withdrawal mechanisms.
Takeaway
The proposed regulation is a major shift toward recognizing that digital asset transactions are primarily electronic. Both brokers and taxpayers should act now to understand how these changes will affect reporting, systems, and record-keeping. With proper planning, you’ll avoid surprises when the change goes live on Jan 1, 2027.