The IRS released a set of frequently asked questions relating to the digital asset broker reporting regime under § 6045 and Treas. Reg. § 1.6045-1. Broker reporting for digital assets is applicable for transactions occurring in 2025, and those who effect digital asset transactions on behalf of their customers are required to file information returns in respect of those transactions on Form 1099-DA by February 2026.
The IRS FAQs are not a binding pronouncement of law, but they provide insight into the IRS’s thinking with respect to the reporting obligations of brokers, custodial wallet providers, and other digital asset market participants. A few of the IRS’s responses are highlighted below:
Question 1 of the FAQs, in line with the statutory language of § 6045, confirms that a “broker” who is subject to reporting obligations refers to a person who effects sales on behalf of their customers. Specifically, according to Question 1, a person who provides custodial services (i.e., maintains custodial wallets), but does not effect transfers on behalf of the holders of such wallets, is not a broker for purposes of § 6045. Question 1 is in line with our previous writing on this subject and clarifies that software developers, custodial wallet providers, and other service providers who do not effect transactions on behalf of customers are not brokers for the purposes of § 6045 and the regulations thereunder.
Question 2 of the FAQs similarly confirms that physical digital asset kiosk operators who effect digital asset transactions on behalf of customers are brokers as defined in the regulations.
Questions 3 and 7 of the FAQs highlight some of the technical nuances of the regulations, particularly that a broker may rely on information provided by a customer (including information provided via another broker) in connection with a transfer of digital assets for the purposes of identifying the assets sold or transferred. A broker cannot rely on that same information, however, for the purpose of basis reporting. Questions 4 through 6 and 8 likewise provide additional examples of this principle.
The remaining questions consider the application of the § 6045 broker reporting rules to other scenarios, including the treatment of NFTs, stablecoins, and transaction fees.
Taxpayers engaged in the sale or exchange of digital assets should continue to consult their tax advisors to assess whether and how these rules may apply to them and whether they have a 1099-DA reporting obligation under § 6045.