What crypto data your firm should request beyond 1099-DA (checklist + best practices)

TLDR

• Relying on Form 1099-DA alone may lead to missing cost basis and unreported taxable activity that occurs outside U.S. custodial brokers.
• Shift your firm’s request strategy from “send me your tax forms” to “identify and provide your crypto data sources.”
• Accurate reporting requires exchange APIs or full transaction exports, public wallet addresses, and sufficient context to interpret on-chain activity, including DeFi usage.
• Standardizing how crypto data is identified, collected, and reviewed reduces preparation time, limits rework, and improves accuracy.

1099-DA Is not enough for accurate crypto reporting

The arrival of Form 1099-DA (beginning with 2025 transactions, reported in early 2026) is a milestone for the industry. For tax professionals, however, it also creates a dangerous blind spot. Clients (and sometimes staff) may assume that because an information return exists, it reflects all taxable activity and provides complete cost basis information.

This is rarely true.

The crypto ecosystem is fragmented between centralized, custodial brokers (which have information reporting obligations) and self-custody or decentralized activity (which generally does not). As a result, Form 1099-DA reflects only dispositions effected by a reporting broker. It does not represent the full scope of a taxpayer’s digital asset activity.

Critical limitations of Form 1099-DA include:

1. U.S. custodial exchanges only: Only U.S. custodial digital asset brokers such as Coinbase, Kraken, Binance.US and Gemini are required to issue 1099-DA. Non-U.S. exchanges such as KuCoin, Binance.com, and Bybit do not issue U.S. information returns.
2. 2025 is entirely noncovered: For 2025 transactions, all digital asset dispositions are treated as noncovered. Brokers generally report gross proceeds and disposition information only, and acquisition information is optional. Beginning in 2026, cost basis reporting becomes mandatory only for covered assets, meaning assets acquired on or after January 1, 2026, and held continuously in the same custodial account.
3. Transfers disrupt acquisition history: When assets move between exchanges or into self-custody, brokers frequently lack acquisition information. In these cases, basis may be reported as “unknown” or omitted entirely. Reputable brokers do not report zero basis when acquisition information is missing.
4. Transactions excluded from Form 1099-DA reporting: Certain taxable transactions are not reported on Form 1099-DA, including:
   • Transactions subject to optional aggregate reporting methods, such as:
     • Designated sales of qualifying stablecoins where total annual sales do not exceed $10,000 per customer
     • Non-designated sales of qualifying stablecoins (for example, stablecoin-to-non-stablecoin trades)
     • Specified NFT sales where annual proceeds do not exceed $600
   • Certain lending, staking, and wrapping transactions excluded from broker reporting under Notice 2024-57
   • Off-platform dispositions, such as using digital assets to pay for goods or services
5. No visibility into DeFi, self-custody, or peer-to-peer transactions: Form 1099-DA does not capture decentralized exchange activity, self-custody wallet transactions, or taxable events that occur entirely outside a custodial broker’s platform.

If a firm relies on Form 1099-DA as the complete record, it risks missing taxable events and overstating gains due to missing acquisition information when assets have moved across platforms or into self-custody.

Ask for data by venue, not just "crypto stuff"

To get a complete picture, you must change how you frame your data request. Don't ask a client for "your crypto documents." Ask for where the client’s assets were held and used.

Vague requests lead to "shoebox" dumps of PDFs that are impossible to reconcile. You need a view across three distinct silos:

1. Centralized Exchanges (CEX): Both U.S. custodial (Coinbase, Kraken, Binance.US, Gemini, Fidelity, Robinhood, PayPal) and non-U.S. platforms (KuCoin, Binance.com)
2. Self-Custody Wallets: Ledger, MetaMask, Phantom, Trust Wallet
3. Decentralized Applications (dApps): Uniswap, OpenSea, Aave, Curve

Master checklist: Crypto data to request from clients

Tax forms and statements

• Form 1099-DA: From every U.S. custodial exchange used by the client (Coinbase, Kraken, Binance.US, Gemini, Fidelity, Robinhood, PayPal, etc.)
• Form 1099-MISC: For certain types of ordinary income reported by custodial platforms (for example, staking or rewards programs), where applicable.
• Form 1099-NEC: For compensation paid in digital assets where the payer has a Form 1099-NEC reporting obligation.
• Form 1099-B: For traditional securities or certain regulated products (e.g., exchange-traded futures) offered by some digital asset platforms.
• Prior Year Workpapers: Required to establish opening positions and transaction history. In addition, confirm that the client properly reported digital asset activity in prior-year income tax filings and assess the accuracy and completeness of those filings. This review may identify prior-year errors, amendment opportunities, or potential compliance risks that should be addressed before proceeding.

Centralized exchange activity

For every exchange—both U.S. custodial (e.g., Coinbase, Gemini, Kraken, Binance.US) and non-U.S. platforms (e.g., KuCoin, Binance.com)—request the following, prioritizing API access whenever available:

• API Access (Preferred): Obtain read-only API access to pull the complete transaction history, including trades, transfers, rewards, and internal movements. API data is generally more complete, time-consistent, and less error-prone than CSV exports.
• Full Transaction History (CSV, if API is unavailable): If API access is not available, request the native CSV export covering all activity types (trades, transfers, rewards, fees). Do not accept PDF statements.
• Deposit & Withdrawal History: Ensure inbound and outbound transfers are captured. While this data is often included in APIs, some exchanges provide it as a separate export. This information is critical for tracing transfers between platforms and wallets.
• Reward/Staking Activity: Confirm that all reward inflows are captured in the data. These inflows generally represent ordinary income upon receipt, regardless of whether the exchange labels them as “staking,” “rewards,” or “yield.”

Note: Trade history alone is insufficient. If a client transferred Bitcoin into Coinbase from an external wallet, the trade history may show the eventual sale but not the acquisition. Complete transfer data is required to link the disposition to its original acquisition and avoid overstated gains.

Critical distinction: Non-U.S. exchanges do not issue Form 1099-DA. Transaction data must be obtained directly from the platform, preferably via API, and otherwise through native CSV exports. Availability may vary depending on the exchange’s KYC rules and the client’s account status.

Self-custody wallets

• Public Wallet Addresses: Request the public address (e.g., 0x... for Ethereum, bc1... for Bitcoin) for every wallet the client controls.
• Extended Public Keys (xPub): For Bitcoin-like chains (BTC, LTC, DOGE), an xPub key allows you to see all addresses generated by a single wallet without exposing private keys.

Why this matters: Once you have the public wallet addresses or xPub keys, you can independently reconstruct the complete on-chain transaction history directly from the blockchain. This data is authoritative and does not rely on client-maintained records or wallet software exports.

When a client transfers assets from Coinbase to MetaMask, trades on Uniswap, and later transfers those assets to Kraken to sell, the Form 1099-DA issued by Kraken will reflect the sale but may report the cost basis as unknown. The wallet addresses are required to reconstruct the acquisition history, identify other taxable events, and establish accurate cost basis.

DeFi, NFT, and other onchain platforms

Most DeFi, NFT, and other on-chain activity is discoverable directly from a client’s public wallet addresses. In general, if a client connects a wallet to a non-custodial platform (e.g., Uniswap or OpenSea), the resulting transactions will already appear in the on-chain wallet history.

This section is intended to identify edge cases where additional context may be required.

• Platform Disclosure (Confirmatory): Ask clients to list any DeFi protocols or on-chain platforms used only if they believe certain activity may not be evident from wallet data alone (e.g., protocol-specific abstractions, unsupported integrations, or complex derivatives).
• NFT Marketplaces: Most NFT activity on platforms such as OpenSea or Magic Eden is fully reflected in the connected wallet history. Platform names are helpful only where transaction labeling or metadata is unclear.
• Liquidity Pool Participation: Liquidity provision and fee income are generally visible on-chain. Platform identification may be needed in limited cases where the protocol’s transaction structure is not fully supported by the firm’s tooling.
• DeFi Yield or Staking Protocols: Yield farming, staking derivatives, and similar activity typically appear as on-chain inflows and outflows. Platform disclosure may be necessary where classification or timing is ambiguous.

Important: DeFi and other self-custody activity is not reported on Form 1099-DA. In most cases, this activity is identified through wallet-level blockchain data. Platform disclosure is used only to supplement or clarify the on-chain record, not to replace it.

Ordinary income-generating activities

Many events that give rise to ordinary income are already visible through centralized exchange data and public wallet addresses. In most cases, no separate documentation is required to identify these transactions. This section is intended to address classification, timing, and business activity questions that may not be clear from transaction data alone.

These items generally give rise to ordinary income, typically reported on Schedule 1, unless the activity rises to the level of a trade or business and is reportable on the appropriate business return.

• Mining Activity (if applicable): Confirm whether the client engaged in mining as a trade or business or on a personal basis. On-chain rewards typically reflect gross income. Additional records are only required if the activity rises to the level of a business and expenses are being claimed.
• Staking and Protocol Rewards: Rewards are generally identifiable as on-chain inflows. Additional clarification may be required to determine timing, valuation, or whether rewards were subject to restrictions or delayed access.
• Airdrops: On-chain activity typically establishes the event. Client confirmation may be needed to determine when the client obtained dominion and control and whether income recognition occurred in the current year.
• Compensation or Services Paid in Digital Assets: If digital assets were received in exchange for services, confirm the nature of the arrangement and whether the activity constitutes trade or business income.
• Gaming, Incentive, or Promotional Rewards: Tokens or NFTs earned through games, referrals, or incentive programs usually appear in wallet data. Clarification may be required to determine income character and fair market value at receipt.
• Affiliate or Referral Programs: Confirm whether inflows represent promotional income, compensation, or rebates, as characterization affects reporting and potential self-employment treatment.

Important: Ordinary income is generally identified through exchange records and wallet-level transaction data. Additional documentation is requested only to clarify income characterization, timing, or whether the activity constitutes a trade or business.

Other crypto activity

• OTC Trade Documentation: Contracts, trade confirmations, or settlement communications for over-the-counter transactions. These trades often occur outside standard exchange workflows and may not be fully reflected in exchange CSVs or APIs, requiring separate documentation to establish acquisition and disposition details.
• Lost or Stolen Funds Documentation: If digital assets were lost due to exchange bankruptcies, platform failures, hacks, or other security incidents, gather available documentation. This may include account statements, bankruptcy claims, correspondence, or evidence of loss. Additional fact development may be required to determine tax treatment, timing, and whether any recovery or litigation is pending.
• Gifts Received: Documentation establishing the donor’s cost basis and the fair market value of the digital assets at the time of the gift. Wallet or exchange data typically shows receipt, but basis information generally must be obtained from the donor or other records.
• Inherited Crypto: Date-of-death valuation and documentation supporting the step-up in basis. Estate records or valuation reports are typically required, as wallet or exchange data alone does not establish inherited basis.

Screening questions to include in intake forms

The digital asset question on Form 1040 is intentionally broad and appears on all individual returns. Your client organizer should mirror this structure, using the Form 1040 question as the initial trigger and then drilling down only where applicable.

At a minimum, ensure your organizer includes the Form 1040 digital asset question, followed by targeted follow-up questions for clients who answer “Yes.”

Add or adapt the following questions in your organizer:

1. Form 1040 digital asset question: “At any time during 2025, did you: (a) receive (as a reward, award, or payment for property or services); or (b) sell, exchange, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?”
2. If yes: “Did you buy, sell, or exchange digital assets on any centralized exchange? If so, list all exchanges used, including U.S. platforms (Coinbase, Kraken, Binance.US, etc.) and non-U.S. platforms (KuCoin, Binance.com, etc.).”
3. “Did you use any self-custody wallets to hold or transact in digital assets?” (Examples include hardware wallets, mobile wallets, browser wallets, or other wallets where you control the private keys.)
4. “Did you trade digital assets on any decentralized exchange or protocol (such as Uniswap, PancakeSwap, or Curve)?”
5. “Did you buy, sell, mint, or otherwise transact in non-fungible tokens (NFTs) during the year?”
6. “Did you receive digital assets as rewards, compensation, or incentives?”(Check all that apply)
   • Staking or protocol rewards
   • Lending or liquidity-related rewards
   • Mining rewards
   • Airdrops or promotional distributions
7. “Did you transfer digital assets between exchanges, wallets, or accounts that you control?” (These transfers are relevant for tracking acquisition history and cost basis.)
8. “Did you participate in more complex DeFi activity during the year?” (Select all that apply)
   • Liquidity pools
   • Yield farming strategies
   • Lending or borrowing protocols
   • Wrapped or derivative tokens
   • Borrowing against digital asset collateral

Practice note: Many of these activities will be evident from exchange and wallet data. These questions are designed to surface complexity early, confirm completeness, and assist with engagement scoping and pricing rather than to replace transaction-level data collection.

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Understanding 1099-DA: What to expect

For 2025 transactions (reported in early 2026):

• All digital asset transactions are treated as noncovered for reporting purposes.
• Brokers generally report gross proceeds, disposition date, and quantity only.
• Cost basis and acquisition information may be included on customer statements where available but are not required to be reported to the IRS.
• As a result, firms should expect incomplete acquisition history and must rely on client records, exchange data, and wallet activity to determine accurate gain or loss.

For 2026 and later transactions:

• Covered assets are limited to digital assets acquired on or after January 1, 2026, and held continuously in the same custodial account.
• For covered assets, brokers are required to report acquisition date, cost basis, and holding period classification to the IRS.
• Any transfer out of a custodial account breaks covered status. Once transferred, the asset becomes a noncovered asset for reporting purposes.
• In practice, clients who move assets between exchanges or into self-custody will continue to generate transactions with incomplete acquisition information, similar to the 2025 reporting environment.

When cost basis information is not available: When a broker does not have acquisition information, cost basis is typically reported as unknown or left blank. A stated basis of $0.00 indicates that the broker is affirmatively reporting zero basis, not that basis information is missing.

Client communication after organizer review

In most firms, the client organizer should be the primary mechanism for identifying digital asset activity and collecting initial documentation. Crypto exposure is typically identified through organizer responses, tax planning discussions, or prior-year work, with supporting tax forms uploaded alongside the organizer.

Client emails are most effective when used after the organizer and initial documentation have been reviewed, to resolve specific gaps or questions identified during preparation.

Crypto follow-up requests

Follow-up communication is appropriate only when the information provided through the organizer and uploaded documents is incomplete or cannot be reconciled.

Common situations that warrant follow-up include:

• A Form 1099-DA reflects dispositions without sufficient acquisition information
• Exchange records show transfers out with no corresponding wallet data
• The organizer indicates digital asset activity, but no supporting records were provided
• Prior-year positions cannot be reconciled to current-year activity

Scope of follow-up requests

Follow-up requests should focus narrowly on the items needed to complete reconciliation, such as:

• Confirmation of exchanges, wallets, or platforms already identified in the organizer
• Access to exchange APIs or transaction history where data is incomplete
• Public wallet addresses associated with transfers reflected in exchange records
• Prior-year crypto workpapers or records needed to establish opening positions
• Clarification of income-related transactions where characterization or timing is unclear

This approach minimizes client friction, reduces unnecessary back-and-forth, and allows the firm to focus on reconciliation rather than repeated discovery.

Setting expectations with clients

When requesting additional information, it is helpful to explain that:

• Forms such as 1099-DA reflect only activity visible to a particular broker
• Transfers between exchanges and wallets frequently result in missing acquisition information
• Accurate reporting may require reconciling exchange data, wallet activity, and prior-year records

Clear communication at this stage supports accurate reporting and reinforces the firm’s role in resolving complex digital asset activity, rather than simply relying on tax forms.

Operational tips for firms

Centralize ingestion

Crypto data should be ingested through a centralized process rather than handled ad hoc by individual preparers. While clients may still send documents via email, firms should establish a standard intake workflow that routes all crypto-related files, APIs, and wallet information to a designated location or team for ingestion and normalization.

Centralizing ingestion allows firms to:

• Apply consistent data standards across clients
• Track completeness of submissions
• Separate data collection from reconciliation and tax preparation
• Reduce the risk of missing or duplicative information

Use appropriate technology

Once exchange data and wallet information have been collected, reconciliation should not be performed manually in spreadsheets. Where available, API connections should be used to pull complete, time-consistent transaction data directly from exchanges. CSV uploads should be used when API access is not available or incomplete.

A specialized platform such as CoinTracker is designed to handle this workflow by:

• Normalizing data across multiple exchange formats, including non-U.S. exchanges
• Ingesting on-chain wallet activity directly from blockchain data
• Interpreting decentralized protocol transactions
• Separating capital transactions from income-related activity

These tools help identify common reconciliation issues, including:

• Missing acquisition information that must be established from client records
• Transfers between platforms that could otherwise be misclassified
• Transactions that lack sufficient detail for accurate reporting
• Income events reflected in on-chain or exchange data that require classification

Using purpose-built technology allows preparers to focus on analysis and reporting rather than manual data cleanup.

Train staff on completeness checks

Staff involved in crypto reconciliation should be trained to identify situations where the available data is incomplete, cannot be reconciled, or requires additional clarification. These checks may occur during initial ingestion, within a crypto reconciliation platform, or while reviewing raw exchange or wallet data.

Common indicators that follow-up is required include:

1. Unmatched Transfers: Exchange or platform data shows withdrawals or deposits that do not reconcile to any known wallet address or other exchange account. This often indicates a missing wallet, exchange, or data source.
2. Use of Non-U.S. Exchanges Without Supporting Data: The organizer or client disclosures indicate activity on a non-U.S. exchange, but no API access or transaction history was provided. In these cases, platform-level data is typically the only source of activity.
3. Dispositions With Missing or Incomplete Acquisition Information: Sales or other dispositions appear in exchange data, but acquisition details cannot be determined from the available records. This commonly arises after transfers between platforms or into self-custody.
4. Wallet Activity That Cannot Be Clearly Classified: Wallet addresses are provided, but certain transactions cannot be readily classified based on on-chain data alone. This may require clarification regarding the nature of the activity or the platforms involved.
5. Income Activity Indicated but Not Fully Reflected in Data: The organizer or client discussions reference staking, rewards, or similar activity, but corresponding inflows are not evident in the exchange or wallet data. This typically signals a missing account, wallet, or incomplete data set.

Training staff to recognize these patterns early helps prevent downstream issues, reduces rework, and ensures that follow-up requests are focused on resolving specific reconciliation gaps rather than re-collecting information already provided.

Defining scope and responsibilities for digital asset work

For individual clients, scope and responsibility are often defined through the client organizer, standard tax preparation terms, and portal disclosures rather than a separately negotiated engagement letter. Regardless of format, firms should clearly establish how digital asset activity is handled to avoid scope creep and misunderstandings.

Consider addressing the following as part of your organizer or standard engagement terms:

1. Digital asset reconciliation as a distinct service: Clarify that reconciling digital asset transactions, including exchanges, wallets, and on-chain activity, may fall outside standard tax preparation and may be priced separately based on complexity.
2. Client responsibility for data completeness: Specify that clients are responsible for providing complete and accurate information for all digital asset activity, including exchanges, wallets, and platforms used.
3. Fees related to data reconstruction: Disclose that additional time and fees may apply when transaction history, acquisition information, or prior-year records are incomplete or require reconstruction.
4. Scope limitations: Note that the firm’s ability to report accurate gain, loss, and income depends on the completeness of information provided. If data is missing or cannot be reconciled, the firm may need to rely on available records or limit the scope of reporting.

Establishing these expectations upfront helps prevent situations where a seemingly simple individual return expands into a complex digital asset engagement with incomplete records and significant reconciliation effort.

Crypto-specific document retention considerations

Most CPA firms already maintain formal document retention policies. Digital assets introduce a few practical considerations that firms should account for within those existing frameworks.

Unlike traditional financial institutions, crypto platforms may shut down, restrict access, or purge historical data. As a result, records that are available today may not be recoverable in future years when assets are sold or examined.

Within your existing retention standards, consider preserving:

• Exchange transaction history files or API-derived exports used in preparation
• Public wallet addresses and the corresponding transaction histories relied upon
• Fair market value sources used to measure income at receipt
• Workpapers supporting acquisition history and gain or loss calculations

These records are often necessary to support basis, income recognition, and holding period determinations in later years, particularly when assets are disposed of long after acquisition or when prior platforms are no longer accessible.

The objective is not expanded retention, but defensible continuity for positions that may be revisited years later.

Key takeaways for firms

1. Form 1099-DA is an input, not a complete record.It reflects only dispositions reported by U.S. custodial brokers and does not capture activity in self-custody wallets, DeFi protocols, peer-to-peer transactions, non-U.S. exchanges, or many income-generating events.
2. 2025 reporting will resemble a proceeds-only environment.For 2025 transactions, brokers generally report gross proceeds and disposition details without comprehensive acquisition history. Firms should expect to rely heavily on exchange data, wallet activity, and prior-year records to determine accurate gain or loss.
3. Transfers are the primary source of missing acquisition history.When assets move between exchanges or into self-custody, acquisition information is frequently lost from the broker’s perspective. Accurate reporting depends on tracing activity across platforms and wallets, not relying on a single form.
4. Data collection should be venue-based and API-first.Effective crypto workflows focus on identifying where assets were held and used, prioritizing exchange APIs and complete transaction exports, supplemented by public wallet addresses for on-chain activity.
5. Ordinary income is identified through activity, not labels.Staking rewards, mining, airdrops, protocol incentives, and similar events often appear as on-chain or exchange inflows and must be evaluated for proper characterization and timing, regardless of how platforms describe them.
6. Client organizers should drive discovery; follow-up should resolve gaps.Initial identification of digital asset activity belongs in the organizer and planning process. Follow-up requests should be targeted, addressing specific reconciliation issues rather than reopening discovery.
7. Technology enables scale; judgment ensures accuracy.Purpose-built tools can normalize data and surface issues, but professional judgment is required to classify transactions, establish acquisition history, and determine appropriate tax treatment.
8. Prepare now for continued complexity beyond 2026.While cost basis reporting expands for certain custodial activity beginning in 2026, clients who transfer assets or use self-custody will continue to generate transactions requiring reconciliation well beyond Form 1099-DA.

Correct crypto reporting starts with correct data. Form 1099-DA adds visibility, but accurate reporting depends on understanding how, where, and why digital assets were used, not just what appears on a single form.

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