Broker Reporting Rules 2026: What Exchanges Must Report to the IRS

The era of anonymous crypto gains is closing fast. Under the updated crypto tax rules taking effect in 2026, centralized exchanges operating in the United States are now required to file Form 1099-DA — a new information return specifically designed for digital asset transactions — and send copies to both the IRS and their customers. For millions of retail traders, this is the most significant shift in crypto tax reporting since the IRS first classified virtual currencies as property in 2014.

This post breaks down exactly who must report, what gets reported, and how these changes interact with similar frameworks rolling out in the UK, EU, and Australia.

What Are the 2026 Crypto Tax Rules for Broker Reporting?

The infrastructure legislation passed in 2021 amended IRC §6045 to expand the definition of "broker" to include any person who regularly provides facilities for the transfer of digital assets in exchange for consideration. In plain terms: cryptocurrency exchanges, hosted wallet providers, and certain payment processors are now subject to the same third-party reporting obligations that traditional brokerages have carried for decades on stock and bond sales.

The IRS has long held that virtual currencies are property for federal tax purposes — a position first articulated in IRS Notice 2014-21 and confirmed through subsequent guidance. What's new isn't the underlying tax treatment; it's the automated paper trail now flowing from exchanges to the agency. Beginning with transactions occurring in tax year 2025 (reported in early 2026), qualifying brokers must file 1099-DA returns covering gross proceeds from digital asset sales.

Which Entities Count as "Brokers" Under the New Rules?

The IRS finalized broker regulations that distinguish between several categories of reporting entities:

• Centralized exchanges (CEXs): Platforms like Coinbase, Kraken, and Gemini that hold customer assets, execute trades, and maintain Know-Your-Customer (KYC) records. These are the primary targets of the 2025/2026 rollout and face the least ambiguity about compliance obligations.
• Hosted wallet providers: Services that custody digital assets on behalf of users. If the provider facilitates sales or transfers for consideration, they generally fall within scope.
• Kiosk operators and payment processors: Bitcoin ATM operators and merchants that facilitate digital asset purchases are included under the expanded definition.
• DeFi protocols and unhosted wallets: The IRS issued separate — and far more contested — proposed rules for decentralized brokers. Enforcement of reporting obligations on non-custodial software protocols has been delayed pending further rulemaking and legal challenges.

For most retail users of major exchanges, the first category is what matters most right now. If you bought and sold ETH on a CEX in 2025, a 1099-DA covering your gross proceeds should appear in your tax documents early in 2026.

What Does Form 1099-DA Actually Report?

Form 1099-DA captures the information the IRS needs to cross-reference against a taxpayer's reported gains and losses. Key fields include:

1. Gross proceeds from each digital asset sale or exchange
2. Date of acquisition and disposal (enabling the IRS to verify short- vs. long-term holding period treatment under IRC §1221)
3. Cost basis — though this field is being phased in over time, as exchanges vary in how long they have held cost basis data for older positions
4. Digital asset description (token name and quantity)
5. Transaction type (sale, exchange, or other disposition)

For cost basis, the IRS's Publication 551 and Publication 544 govern how brokers are expected to calculate and report basis for securities-style assets. Exchanges are generally defaulting to FIFO (first-in, first-out) unless a customer has explicitly designated a different accounting method — a detail that matters enormously for traders holding positions at varying cost bases across market cycles.

If you've been using DeFi protocols alongside centralized exchanges, note that any gains realized on-chain — through AMM swaps, LP exits, or perpetual futures — will not appear on a 1099-DA from a CEX. You remain responsible for self-reporting those transactions accurately, which is where purpose-built crypto tax software that ingests on-chain data becomes practically essential.

How Does a 1099-DA Affect Your Filing?

Receiving a 1099-DA doesn't change what you owe — it changes how easily the IRS can verify it. According to the IRS virtual currency FAQ, every sale or exchange of cryptocurrency is a taxable event requiring you to calculate and report gain or loss under IRC §1001. That obligation existed before 1099-DA. The new form simply creates a matching document the IRS can compare to your Schedule D and Form 8949.

What this means practically:

• Discrepancies attract scrutiny. If your reported proceeds differ materially from the broker's 1099-DA figures — because you transferred coins from a self-custody wallet to an exchange before selling, for example — you may receive a CP2000 notice. Documentation of your acquisition cost and holding period is critical.
• Cost basis conflicts are common. An exchange may only have cost basis data from the point you deposited assets. If you mined, staked, or bought tokens on-chain and then transferred them to a CEX, the exchange's basis figure may be zero or incorrect. You'll need your own records to file accurately.
• Accounting method elections matter more than ever. Once a broker assigns FIFO to your account, deviating from it on your return creates a mismatch. Review your method election — FIFO, HIFO, or specific identification — before trades settle.

The Global Picture: CARF, DAC8, and HMRC Reporting

The US isn't acting in isolation. A near-identical architecture is being deployed internationally, making 2026 a watershed year for crypto tax transparency across jurisdictions.

OECD Crypto-Asset Reporting Framework (CARF): Developed by the OECD and adopted by dozens of countries, CARF requires crypto service providers to report customer transaction data to their domestic tax authority, which then exchanges the information internationally — the same model used for traditional financial accounts under the Common Reporting Standard (CRS). Countries that have committed to CARF implementation include the UK, Canada, Australia, and most EU member states.

EU DAC8: The EU's eighth iteration of the Directive on Administrative Cooperation (DAC8) implements CARF within the European single market and extends reporting obligations to all crypto-asset service providers (CASPs) licensed under MiCA. CASPs are required to collect and report user transaction data starting in 2026, with first exchanges of data between EU member states scheduled for 2027.

HMRC (United Kingdom): The HMRC Cryptoassets Manual has long classified crypto gains as capital gains subject to Capital Gains Tax (or income tax for trading activity). UK exchanges are now required to share data with HMRC under powers introduced in the Finance Act, and the UK is an early adopter of CARF-aligned reporting. UK taxpayers should expect their exchange data to flow to HMRC in much the same way US data flows to the IRS.

Australia: The ATO has used data-matching programs with Australian exchanges for several years and has indicated it will adopt CARF-aligned reporting. Australian crypto investors have been subject to capital gains treatment on disposals since the ATO's first guidance — the new framework simply automates the data collection.

What If You Trade Mostly on DeFi?

Here is where the 2026 reporting rules create an asymmetry. A trader who routes most activity through Uniswap, Jupiter, or Hyperliquid perps will receive no 1099-DA — those protocols have no reporting obligation under the current rules. But the taxable event still occurs with every swap, LP withdrawal, or settled perpetual position. The IRS has been unambiguous: the absence of an information return does not eliminate the tax liability.

Tools like Defitax are designed specifically for this gap — ingesting wallet-level transaction histories across EVM chains, Solana, and beyond, classifying DeFi activity (swaps, bridging, staking, LST conversions) according to current IRS and international guidance, and producing the Forms 8949 or jurisdiction-specific reports needed for filing. Relying solely on the 1099-DA you receive from Coinbase while ignoring three years of on-chain swaps is a recipe for underreporting — and the IRS's FAQ guidance makes clear that all virtual currency transactions must be reported regardless of whether a third party issues a form.

For a deeper look at how DeFi-specific activity is taxed, see our guide to DeFi taxes.

Key Takeaways

• Centralized exchanges must now file Form 1099-DA with the IRS for US customers, reporting gross proceeds on digital asset sales beginning with tax year 2025.
• The underlying tax rules haven't changed — crypto has been treated as property since 2014. What's new is systematic third-party reporting, which increases the IRS's ability to detect discrepancies.
• Cost basis data from exchanges may be incomplete if you transferred assets from self-custody wallets. Maintain your own records and reconcile them against any 1099-DA you receive.
• DeFi activity remains self-reported. On-chain transactions won't appear on a broker form — but they are still taxable events that must be reported.
• Internationally, CARF and DAC8 are the US equivalent for dozens of other countries. If you trade on a regulated exchange anywhere in the developed world, data sharing with your home tax authority is now effectively automatic.
• Review your accounting method election (FIFO vs. HIFO vs. specific ID) before the end of each tax year — the broker's default may not be optimal for your situation, and a post-hoc change creates a 1099-DA mismatch.

Whether you're filing in the US, UK, Australia, or the EU, 2026 is the year the informal era of crypto tax self-reporting ends. The infrastructure for automated data matching is live. Staying ahead of it means keeping clean records across both custodial and non-custodial activity — not just the transactions that show up on an exchange statement.