US Crypto Investors Alarmed by New Tax Requirements

New tax regulations from the IRS have generated anxiety among American cryptocurrency investors, mandating exchanges to report user information. Starting with the 2026 tax year, brokerages will need to issue a new form, labeled "Income from Digital Assets from Brokerage Transactions" (1099-DA), detailing clients' transactions involving digital assets, including investments, gains, and losses.

All U.S. licensed crypto exchanges, such as Coinbase, must complete this form for every customer. This shift from self-reporting to mandatory transaction reporting has alarmed many investors. A recent survey by Awaken Tax, conducted with 1,000 crypto participants, revealed widespread concern over the implications of these changes.

Investor Sentiments

Andrew Duka, founder of Awaken Tax, criticized the new rules, labeling them as a "blunt instrument" created by lawmakers unfamiliar with the complexities of cryptocurrencies. He emphasized that the treatment of crypto akin to stocks ignores the unique nature of digital assets. Many users manage funds across multiple wallets and engage with decentralized finance (DeFi) services, making straightforward reporting challenging.

Currently, platforms like Coinbase report only sales income and lack the capability to account for the tax basis of specific assets, which includes critical details like purchase prices and acquisition costs. Duka noted that investors must now fill in significant gaps through the revised Form 8949, prompting discussions on platforms like Reddit for better accounting strategies. He lamented that the new documentation is poorly designed for crypto users, despite attempts at simplification.

Additionally, in December 2025, a proposal was initiated by U.S. lawmakers aimed at addressing the taxation of digital assets, which includes provisions for small transactions with stablecoins and a grace period for staking activities.