The US Internal Revenue Service (IRS) is seeking to require electronic delivery of tax forms to cryptocurrency exchange users.
Under current regulations, exchanges are required to provide paper copies of tax form 1099-DA, an IRS tax form used to document cryptocurrency transactions, from a centralized exchange or broker if users request paper forms.
Proposed fresh rules, expected to be published on Friday, would eliminate this requirement and allow brokers to “terminate” relationships with existing clients if they refuse to submit tax forms electronically.
Additionally, the tax office application It would also prohibit users from revoking consent to employ electronic forms retroactively.
The IRS requires all broker-dealers, platforms that provide crypto services to users, such as exchanges, to report user receipts from each transaction and provide users with a Form 1099-DA detailing their transaction history during tax season.
However, exchanges are not required to track cost basis through fiscal year 2025; tracking the cost basis, i.e. the price paid for each investment purchase, is the investor’s responsibility. The IRS has outlined reporting requirements for brokers:
“Intermediaries required to make such refunds must provide customer identification information, such as the customer’s name and tax identification number (Taxpayer Identification Number), as well as other relevant information, including the gross proceeds of the transaction.”
One in five Americans, or about 55 million people, owns digital assets in the U.S. According to to the National Cryptocurrency Association (NCA), a cryptocurrency advocacy group.
Tax compliance was one of the biggest obstacles to cryptocurrency adoption, with 10% of 54,000 respondents to the NCA survey citing taxes on digital assets as an issue.
According to the national body, more than a third of respondents indicated they wanted more education on the tax implications of digital assets.
Related: Crypto Blockchain Association Lobby Presents Tax Plan to Congress
Concerns resurface after Trump rescinded controversial ‘DeFi broker rule’
In December 2024, the IRS issued a rule classifying all front-end services, including decentralized exchange (DEX) and decentralized finance (DeFi) platforms, as broker-dealers, subjecting them to tax reporting requirements.
This meant that DeFi platforms would have to collect know-your-customer (KYC) information and report user sales revenue to the IRS.
US President Donald Trump signed a resolution in April 2025 that rescinded the DeFi broker rule, which was well received by the cryptocurrency industry.
However, crypto industry executives have raised alarm over ambiguous language in the stalled CLARITY Market Structure Act, which could impose KYC reporting requirements on DeFi platforms and restrict activity in the nascent sector.
Warehouse: The Clarity Act risks repeating Europe’s mistakes, a cryptocurrency lawyer warns
