IRS Update on Cryptocurrency Tax Guidelines: No Need to Report Wallet Addresses, Transaction IDs, and Specific Times

The latest announcement from the Internal Revenue Service (IRS) in the United States indicates that the draft Form 1099-DA for digital asset proceeds from broker transactions has been updated. Starting from the 2026 tax year, taxpayers will no longer be required to provide wallet addresses, transaction IDs, and transaction times. The announcement also states that the new regulations for cryptocurrency tax reporting will take effect in 2025, with decentralized exchanges (DEX) and wallet providers exempted for the time being.

IRS Announces New Cryptocurrency Tax Regulations: Effective in 2025, DEX and Wallet Providers Exempt for Now

IRS Updates 1099-DA Form: No Need to Report Wallet Addresses and TxID

The IRS recently released a revised 1099-DA form, making significant adjustments to address past controversies related to high compliance costs and privacy concerns. It is expected to require taxpayers to report digital asset transaction data starting from 2025 for the tax year 2026.

Specifically, the key changes include:

• Eliminating the requirement for taxpayers, typically cryptocurrency brokers, to operate digital asset transactions under the "broker type and specific category."
• Removing the requirement to report the exact time of the transaction, only the date is needed.
• No longer requiring reporting of wallet addresses and transaction ID TxID.

Previously, the old version of the draft was criticized for being too stringent, requiring reporters to disclose wallet addresses and exact transaction times for each transaction on the form, causing burdens on the public and exposing financial risks:

The privacy of wallet information is crucial for users and taxpayers entrusted with handling this data, as it increases the risk of being stolen by the government and malicious actors.

IRS: Enhancing Reporting Clarity and Reducing Burden

IRS Commissioner Danny Werfel stated in a release that the updated form will enhance reporting clarity for taxpayers and reduce their burdens:

Third-party reporting will enhance compliance, and this step will help ensure that digital assets are not used to conceal or evade taxable income among high-income groups.

He also acknowledged that "digital assets significantly increase the complexity and difficulty of our tax system, but as part of our agency's transformation, we will continue to improve the tax system in this area."

It is reported that the IRS has opened a 30-day public comment period for the latest revision of the 1099-DA form, indicating that further adjustments may be made before the final version is released, and the release date of the final version is yet to be determined:

The form is still a "draft," and taxpayers should not rely on the current released sample of the 1099-DA form for announcements, explanations, or reporting.

DEX and Self-Custody Wallets Still Await Special Legislation

Industry professionals generally believe that the new draft version has improved significantly compared to versions from August last year, April this year, and July, by significantly reducing the amount of data that needs to be reported, thereby reducing compliance costs for reporters and regulatory agencies.

Ji Kim, Legal Policy Director of the Crypto Council for Innovation (CCI), also emphasized:

Although we are still examining the content of the updated form, these changes seem to be welcome and are a result of advocacy by CCI and the industry collectively.

Previously reported, decentralized exchanges (DEX), self-custody wallets, and operators of decentralized network infrastructure are currently not within the scope of this law and await future tax implementation through other special legislation.