IRS Moves to Mandate Digital Tax Forms for Crypto Exchanges

Edgen Crypto

·Mar 05 2026, 22:09

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Key Takeaways

The U.S. Internal Revenue Service (IRS) has proposed new regulations to streamline crypto tax reporting. The rules would require brokers to issue tax forms electronically, simplifying compliance for exchanges but giving them the power to close accounts of users who do not consent.

Mandatory E-Delivery: The proposal requires crypto brokers to send Form 1099-DA electronically, removing the obligation to provide paper copies upon request.
Broker Enforcement: Exchanges will gain the right to terminate relationships with clients who refuse to accept digital tax documents.
Streamlined Compliance: The move aims to simplify tax reporting, a process cited as a barrier to adoption by 10% of investors, according to a National Cryptocurrency Association survey.

IRS Mandates Digital Tax Forms for 55 Million US Crypto Holders

The U.S. Internal Revenue Service (IRS) has proposed new rules that would compel crypto exchanges to deliver tax documents electronically. The regulation, slated for publication, shifts the default for Form 1099-DA from paper to digital. Currently, brokers must provide paper copies if a user requests them. Under the new proposal, exchanges can terminate the accounts of clients who refuse to consent to electronic delivery. The change affects a significant portion of the market, as an estimated 55 million individuals, or one in five Americans, hold digital assets.

New Rule Addresses Tax Confusion Cited by 10% of Investors

The proposal aims to streamline a tax compliance process that many investors find complex. A National Cryptocurrency Association survey of 54,000 people revealed that tax reporting was a significant barrier for 10% of respondents, with 39% wanting more education on the tax implications of their crypto investments. This targeted administrative change contrasts with a more expansive "DeFi broker rule" from December 2024, which would have classified decentralized platforms as broker-dealers. That controversial rule was nullified by President Donald Trump in April 2025, and the current proposal represents a more focused effort to formalize reporting procedures for centralized brokers.