Digital asset tax reporting requirements oblige brokers and crypto-asset service providers to report their customers' digital asset transactions to tax authorities, much as securities brokers report sales. In the US the return is Form 1099-DA; in the EU the rules are DAC8, which is based on the OECD's Crypto-Asset Reporting Framework (CARF).
Why It Matters
Both regimes now apply. For sales effected after 2025, US brokers report gross proceeds on Form 1099-DA for all digital assets, and basis as well for digital assets that are covered securities: broadly, assets acquired after 2025 in an account where the broker provided custody. In the EU, DAC8 applies from January 1, 2026, and reporting crypto-asset service providers collect data on the reportable transactions of EU-resident users from that date. For a firm in scope this is a data-lineage problem as much as a tax one: cost, acquisition date and customer tax residence have to be captured where they originate and carried through every transfer.
How It Works in Practice
- 1Collect identity and tax status at onboarding: taxpayer identification numbers for US reporting, and tax residence for DAC8.
- 2Record the acquisition date and cost of every lot held in custody, so basis can be reported when a covered asset is sold.
- 3Capture each reportable sale or exchange with its gross proceeds, and flag whether the asset is a covered or a noncovered security.
- 4File with the tax authority and furnish statements to customers, keeping the records that support each reported figure.
Common Pitfalls
Assuming every asset is covered. The IRS instructions treat as noncovered any digital asset acquired before 2026, any asset transferred in to the broker, and any asset the broker did not hold in custody when it was acquired; basis reporting is not required for those.
Treating stablecoins and NFTs like other tokens. The Form 1099-DA instructions provide optional reporting methods for qualifying stablecoins and specified NFTs, under which basis and certain other information need not be reported.
Building a separate pipeline for each regime. The European Commission notes that the OECD's CARF commentaries can serve as interpretive material for DAC8 to the extent the two texts are aligned, so a shared data model can serve both where the rules match.
Leaving tax-residence data in the onboarding system. Reporting depends on it at the time of each transaction, so it has to stay current and travel with the account.
Sources
- Instructions for Form 1099-DA — Internal Revenue Service
- DAC8: Directive on Administrative Cooperation, crypto-assets — European Commission, Taxation and Customs Union
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