Many American crypto investors are feeling anxious and uncertain as new IRS reporting rules take effect this year. A recent survey of 1,000 U.S. digital asset holders found that more than half fear they could face tax penalties due to confusion surrounding the updated requirements.
The changes mark a significant shift from self-reporting crypto activity to automatic transaction reporting to the Internal Revenue Service.
What Has Changed?
Under the new rules, brokers must issue Form 1099-DA (Digital Asset Proceeds From Broker Transactions) to both taxpayers and the IRS.
This means:
Crypto sales and exchanges are automatically reported
The IRS can compare broker-reported data with individual tax filings
Transparency around digital asset transactions increases significantly
The aim is to reduce tax evasion and improve compliance across the digital asset sector.
Why Investors Are Concerned
While the goal is greater transparency, many investors are worried about how the system works in practice.
One major issue is that brokers can report:
The proceeds from a sale
But often cannot report:
The original purchase price (tax basis)
Acquisition costs
Asset movement between wallets
Because crypto users frequently move assets between multiple wallets or platforms , and interact with decentralized applications , brokers may not have a complete transaction history.
As a result, the reported form may show total proceeds without reflecting the true cost basis, potentially overstating taxable gains.
The Burden Falls on Investors
Under the new framework, investors are responsible for correcting and reconciling any missing information when filing their returns.
Taxpayers must:
Track their original acquisition price
Document transfers between wallets
Adjust capital gains calculations accordingly
Failure to properly reconcile this data could increase the risk of audits or penalties.
Compliance Challenges
According to industry estimates, crypto tax compliance has historically been low, with fewer than 20% of holders fully reporting digital asset activity.
Lawmakers designed the new rules to rapidly increase compliance rates by implementing automatic reporting. However, critics argue that crypto transactions are more complex than traditional stock trades and may not fit neatly into standard reporting frameworks.
Bigger Picture
The new IRS rules represent a major step toward tighter oversight of the digital asset market in the United States.
While greater transparency may strengthen long-term regulatory clarity, the transition period is causing confusion and anxiety among retail investors.
For crypto holders, the key takeaway this year is clear:
Maintain accurate records
Track wallet transfers carefully
Understand your tax basis
Seek professional guidance if necessary
As the digital asset industry matures, regulatory integration appears inevitable , but for many investors, 2026 may be a challenging adjustment period.