Form 1099-DA Won't Show Your Crypto Cost Basis Until 2026 — Here's Why That's About to Matter

If you filed your 2025 crypto trades this spring and the numbers on your new Form 1099-DA looked oddly incomplete, that wasn't a glitch — it was the design. For 2025 transactions, brokers were only required to report what you sold your digital assets for, not what you originally paid for them. Cost basis — the original price you paid for an asset, which determines how much of a sale counts as taxable gain — was left entirely off the form. That changes with 2026 transactions, and the mid-year mark is a reasonable moment to check whether your own records are ready for it.

How we got here

The broker-reporting requirement traces back to a 2021 law change (the Infrastructure Investment and Jobs Act) that expanded who counts as a "broker" for tax reporting purposes — think custodial exchanges, hosted wallet providers, and similar platforms that actually hold your digital assets on your behalf. The Treasury and IRS finalized the rules in June 2024. Reporting rolled out in two stages: gross proceeds for transactions starting January 1, 2025, and cost basis for "covered" transactions starting January 1, 2026 — meaning assets acquired on or after that date and held continuously in the same broker account until sale. Crucially, basis reporting doesn't reach back; if you sell an asset in 2026 that you bought in 2023, the broker still isn't reporting basis on that sale.

The 2025 form only told half the story

Because 2025-transaction 1099-DA statements reported proceeds only, most taxpayers had to calculate and substantiate their own basis for that filing season. The IRS also said it wouldn't penalize brokers for late or incomplete 2025 reporting as long as they made a "good faith effort" — a signal that the system itself was still catching up.

Wallet-by-wallet is the new baseline

Separately, the IRS did away with the old approach that let taxpayers pool cost-basis lots across every exchange and wallet they used. As of the start of 2025, basis tracking must generally happen wallet-by-wallet or account-by-account — a "wallet" here just means any place you hold crypto, whether that's an exchange account like Coinbase or a self-custody wallet like MetaMask. There was some transition relief allowing a reasonable reallocation of pre-2025 basis into specific wallets. The lasting takeaway: going forward, lots generally can't be mixed across accounts.

FIFO by default — unless you document otherwise

Absent other instructions, the default method for figuring which "lot" of crypto you sold is FIFO (first-in, first-out) — you're treated as selling your oldest holdings first. Taxpayers can instead use specific identification ("specific ID"), choosing which particular lot they're selling, but it has to be applied separately within each wallet.

Here's the part worth sitting with: IRS relief (extended through the end of 2026) lets taxpayers use specific-ID methods for assets held at a broker without having to notify the broker in advance — but only if the identification is recorded contemporaneously in the taxpayer's own books. The IRS extended this relief because many custodial platforms still aren't built to accept those instructions directly. Practically, that means your broker's 1099-DA and your own basis tracking can diverge, and where they do, your contemporaneous records are what's expected to govern — not the form.

Withholding relief, and what's still excluded

Backup withholding — a flat 24% withheld on certain transactions when taxpayer information doesn't match IRS records — has also been deferred for crypto brokers, with relief now extended through the end of 2026. Several transaction types are exempt from 1099-DA filing until further guidance: wrapping/unwrapping tokens, liquidity-provider transactions, staking, lending, short sales, and certain notional principal contracts (contracts where two parties exchange cash flows based on an underlying asset's value, without owning it). Rewards or compensation earned through those activities, though, generally aren't swept into that exemption.

A note for options traders

If you trade crypto derivatives alongside spot crypto, keep the two reporting tracks mentally separate. Section 1256 contracts — regulated futures and certain listed options, like CME-listed Bitcoin or Ether futures and options on those futures — sit outside the 1099-DA regime entirely. They're reported on Form 1099-B and keep their usual tax treatment: a 60/40 long-term/short-term split, mark-to-market accounting, and no wash-sale rule. (If one of those contracts ever settles in actual delivery of the crypto, that specific event does land on a 1099-DA.) Spot Bitcoin ETFs and listed options on them are also generally treated as ordinary securities on Form 1099-B, subject to standard wash-sale rules — though some practitioners note unresolved technical questions there. Either way, Form 1099-DA is fundamentally a spot/custodial-asset form; exchange-traded crypto derivatives run on the older 1099-B rulebook.

Why mid-2026 is the moment

Because 2026 is the first year any of this basis tracking exists at the broker level, and because wallet-by-wallet rules mean lots can't be blended across platforms, the practical work — logging what you acquired, when, and in which wallet — needs to happen now, rather than being reconstructed during the 2027 filing season. Mismatches between what a broker eventually reports and what a taxpayer independently tracked can create real headaches: amended positions, extra documentation requests, or simply hours spent reconciling numbers that should have matched. This is a genuinely complex and still-evolving corner of tax law, and it's the kind of area where a qualified tax professional's input matters more than a general explainer ever could.

This article is educational commentary on a recent IRS policy area, not personalized tax advice. Speak with a qualified tax professional about how any IRS rule applies to your specific situation.