New IRS 1099-DA Rules: Why Saying ‘No’ Could Get Your Crypto Exchange Account Closed

U.S. crypto investors may soon face a new kind of tax-season decision: tap “I agree” to electronic tax forms, or risk losing access to their exchange accounts. A fresh IRS proposal would let platforms like Coinbase deliver Form 1099-DA only through apps and email—and allow them to refuse service to users who won’t consent.

This is not a new tax or a reduction in reporting. It is a change in how your tax forms reach you, and how easily the IRS can compare what you report to what exchanges file about your trades.

What the IRS is proposing—and what stays the same

The IRS has proposed an alternative electronic delivery process specifically for Form 1099-DA, the new information return for digital asset transactions. The public comment period runs through May 5, 2026, and if finalized, the rules would apply to forms furnished on or after January 1 of the year following publication—so the earliest impact would likely be the 2027 tax season.

One core point: broker reporting to the government does not change. Exchanges will still send the same trade data to the IRS whether you get a paper document, an email, or nothing at all in your mailbox. The proposal is about how you receive your copy, not whether the IRS gets theirs.

What does change is customer delivery. Under current rules, brokers generally must offer paper forms. Under the proposal, crypto exchanges could:

• Make electronic delivery the default and only option for Form 1099-DA
• Obtain streamlined consent, usually during account opening or in updated terms
• Continue filing with the IRS even if you never open or see the electronic form

In practice, you might see a pop-up or a terms-of-service screen with an “I agree” button that includes language saying the exchange may stop servicing your account if you decline electronic delivery.

How exchanges could use mandatory e-delivery

The proposed rules would give exchanges considerable flexibility in how they handle consent and delivery.

First, exchanges could treat agreeing to electronic delivery as part of basic onboarding. If you refuse, the platform could simply not open or continue your account. The IRS proposal explicitly allows brokers to terminate relationships with customers who decline electronic delivery.

Second, once you consent, the broker would not have to let you revoke that consent while you remain a customer. In other words, you might not be able to “go back” to paper without closing your account.

Delivery itself could happen in two main ways:

• Posting the 1099-DA to an in-app or web-based “document center” and sending you an email notice that it’s available, or
• Sending the form directly as an email attachment

Exchanges would be required to keep each year’s form accessible through October 15 of the following year and to retain prior statements for seven years, available upon request. If an email bounces or is otherwise undeliverable, they must send a paper notice within 30 days—but that notice does not have to include the form itself. It is a heads-up, not a replacement for the lost “mail cue” many taxpayers rely on.

The result is a system where your tax forms may exist only inside your exchange account or inbox, even as the IRS continues to receive the same detailed digital feed from the broker.

Why this is part of a bigger crackdown on crypto noncompliance

The electronic-delivery proposal fits into a broader buildout of crypto tax enforcement, centered on Form 1099-DA.

Starting with transactions on or after January 1, 2025, crypto brokers must begin filing Form 1099-DA reporting gross proceeds from digital asset sales. Basis reporting—the cost information needed to calculate gains and losses—begins phasing in for certain transactions on or after January 1, 2026, and only for covered assets acquired from and held with the same broker.

These forms plug directly into the IRS’s Automated Underreporter program, which already identified potential underreported income in over 1 million cases totaling $6.6 billion in fiscal 2023, according to the Government Accountability Office. Information returns like 1099-DA are designed to feed that matching engine.

An IRS research paper found that 6.5% of individuals—about 17.4 million people—reported cryptocurrency sales between 2013 and 2021, while outside surveys suggested that 12% to 21% of U.S. adults owned crypto. That gap implies many crypto holders never show up in sales reporting at all.

The Joint Committee on Taxation has estimated that digital asset reporting provisions would raise roughly $28 billion over 10 years. The IRS cites internal research suggesting that up to 75% of taxpayers with digital assets are currently noncompliant.

Within that context, electronic-only delivery is less about convenience and more about standardizing the infrastructure so automated enforcement works smoothly, even if taxpayers pay less attention to the forms themselves.

What this means for your tax season experience

For everyday investors, the most visible change is psychological rather than technical: tax season may no longer arrive in a physical envelope.

Instead of waiting for a paper 1099 in the mail, you may see:

• An email saying a new tax document is available in your exchange account
• An in-app notification buried among trade confirmations and security alerts
• No obvious “reminder” if you ignore or miss those messages

This shift matters most if you rely on physical mail as your cue to start filing. With electronic-only delivery, missing an email, failing to update an address, or having a notice routed to spam could mean you never see your 1099-DA—even though the IRS has a copy.

Major platforms already operate at large scale. Coinbase’s 2025 10-K reports 9.2 million monthly transacting users and $376 billion in assets on the platform, and other big exchanges are in the same league. If even a fraction of these users receive 1099-DAs exclusively via apps and email, tens of millions of forms will move quietly through digital channels rather than postal mail.

The seven-year retention requirement means your tax documents should remain accessible in your account’s document center, but only if you know to look for them and retain access to the account.

How the enforcement becomes more automated—and less visible

The crucial distinction in this proposal is between what you see and what the IRS sees.

Whether or not you open a single notification, your exchange will still send Form 1099-DA data to the IRS. That information is submitted digitally and can be matched automatically against your tax return. If the IRS detects discrepancies—such as reported gross proceeds on 1099-DA that you never included in your return—you may receive an underreporter notice, along with potential penalties and interest.

The IRS also makes clear that you are required to report digital asset transactions even if you never receive a 1099-DA at all. The agency stresses the importance of recordkeeping, especially because 2025 forms generally will report only gross proceeds. Basis reporting begins in 2026 and only for certain assets, so you will still need your own records or exports to accurately calculate gains and losses.

That creates a practical gap: during the phase-in period, you might receive an official-looking 1099-DA that doesn’t include all the information you need to file correctly. At the same time, the move to electronic-only delivery makes you more dependent on:

• Exchange document centers and dashboards
• CSV or full-history trade exports
• APIs or other tools to reconstruct cost basis

From the IRS’s perspective, this is efficient. Information returns arrive and are processed digitally regardless of how your copy is delivered. From the user’s perspective, enforcement becomes easier to miss in real time—but not easier to avoid.

Practical steps for crypto investors right now

Even before the IRS finalizes these rules, you can prepare for a world where “consent or close your account” is a realistic choice.

Consider the following steps:

• Expect e-delivery to become standard. The proposal doesn’t force exchanges to go digital-only, but it gives them permission. Many are likely to use it for operational simplicity.
• Treat your exchange email settings as tax infrastructure. Make sure your email address is current, enable document and tax-form notifications, and periodically check your spam and promotions folders—especially before February 15, when forms are typically due.
• Download and back up your trade history regularly. Do not rely solely on annual forms, especially if you trade across multiple platforms or have moved assets between them. No single broker may have your complete basis history.
• Know where your document center is. Log into each exchange you use and locate the section where tax documents and statements are stored. Confirm you can download prior years’ forms.

Finally, keep the bigger picture in mind. Internationally, frameworks like the OECD’s Crypto-Asset Reporting Framework and the EU’s DAC8 directive are pushing toward standardized crypto tax reporting. The U.S. electronic delivery proposal is part of that trend: moving crypto closer to the reporting expectations that already apply to traditional securities and brokerage accounts.

The paper trail isn’t disappearing—it’s relocating from your mailbox to your exchange account, while the IRS’s copy continues to flow, largely unseen, through digital rails.