The Internal Revenue Service (IRS) has proposed a new rule that could fundamentally change how cryptocurrency users receive their tax documents. The proposal would allow crypto exchanges, classified as brokers, to require electronic delivery of Form 1099-DA, which reports digital asset trades. Crucially, exchanges could be permitted to terminate business relationships with customers who refuse to consent to this electronic-only delivery method.
The proposed rule creates an alternative electronic delivery process. Under current regulations, brokers must offer customers paper forms. The new system would utilize "streamlined consent," likely presented as a pop-up during account setup or in settings. Language would indicate that the broker may not continue servicing customers who decline. Once consent is given, exchanges would not be required to allow customers to withdraw that consent while remaining active users.
The delivery would occur via email attachments or by posting forms to an online document center with an email notification. Exchanges must maintain access to these documents through October 15 of the following year and retain prior statements for seven years. The only paper fallback guaranteed is a physical notice if an email delivery fails—this notice is procedural and does not contain the full tax form.
This shift is part of a larger enforcement buildout. The requirement for crypto brokers to file Form 1099-DA reporting gross proceeds began for transactions on or after January 1, 2025. Basis reporting, needed to calculate gains and losses, phases in starting January 1, 2026, but only for covered assets acquired from and held with the same broker. The IRS cites an internal study estimating that up to 75% of taxpayers with digital assets are noncompliant, and the Joint Committee on Taxation estimated digital asset reporting provisions could raise roughly $28 billion over 10 years.
For users, the experience shifts from receiving annual paper envelopes to relying on digital notifications within crowded app interfaces. This change could lead to missed deadlines for users accustomed to physical reminders. The proposal is open for public comment through May 5, 2026. If finalized, it would apply to forms furnished on or after January 1 of the calendar year following publication, making the earliest possible effect tax season 2027.
