Join Coinbase next tax season and your tax documents will no longer arrive in the mail.
According to a new IRS proposal, crypto exchanges will be required to file an electronic Form 1099-DA. This form reports digital asset trading and may refuse to trade with clients who refuse to provide it.
The comment period ends on May 5, and if passed, the rule will move the crypto tax report from the mailbox to the platform.
This is not a tax cut or return of reporting requirements. Brokers send the same information to the IRS regardless of how they deliver the forms to clients. The proposal allows exchanges to mandate transfers based on the program.
The result: millions of crypto users receive tax forms only by e-mail and in-app document centers with no paper backup and no right of return.
Change: Crypto taxes won’t get any easier. They become calmer.
What actually changes
The IRS proposal creates an alternative electronic filing process for Form 1099-DA.
Under current rules, brokers must provide paper forms to clients. The proposal allows exchanges to use simplified consent, where customers agree to electronic transfers when setting up an account, and the exchange can terminate relationships with anyone who refuses.
Consent will likely appear as a pop-up window with an “I agree” button and language that the broker may not continue serving customers who opt out.
Once customers have consented, exchanges are not required to allow them to withdraw that consent while they remain customers. The only guaranteed paper withdrawal is a notice if email delivery fails, not the full tax document.
Submissions are made by posting forms to the online document center with email notification or by direct email attachment.
Exchanges must maintain access until October 15 of the following year and retain previous statements for seven years. Unreachable e-mail for 30 days will trigger a physical warning, but this is formal and not a substitute for multi-user e-mail.
| The broker reports to the government | There is no change – The IRS is still accepting information |
| Customer delivery method | Changes — can be app/email only |
| Paper option is required | It may disappear – there is no mandatory paper alternative |
| Refusal of electronic transmission | Possible suspension of the account |
| Withdraw electronic consent later | Permission is not required |
| Where do you find the form? | Document center / email attachment |
| Access window | Until October 15 next year |
| Maintenance | 7 years available on request |
| If the email fails | Notice within 30 days (note, not the full form) |
More performance changes
This proposition is situated within a larger structure of conformity.
Beginning with transactions on January 1, 2025, crypto brokers will be required to report gross income on Form 1099-DA.
The table shows the stages of crypto tax reporting from January 2025 to 2027, the potential consumer impact of electronic-only transfers.Basic reports, cost information for profit and loss calculations, milestones for certain transactions from January 1, 2026, only for covered assets acquired and held by the same broker.
Performance math is important. A Government Accountability Office report found that the IRS Automated Underreporter program identified potential underreported income in more than 1 million cases totaling $6.6 billion in fiscal year 2023.
1099-DA grid that corresponds to the corresponding engine. An IRS research paper found 6.5% of individuals, 17.4 million people, reported selling cryptocurrencies from 2013 to 2021, while external surveys indicated that 12 to 21% of US adults owned crypto.
The gap means that many owners are never on the sales report.
The Joint Committee on Taxation estimates that digital asset reporting provisions would raise about $28 billion over 10 years. The IRS cites an internal study showing that up to 75% of taxpayers with digital assets do not qualify.
The electronic transfer proposal is not about burden reduction. It’s about standardizing the infrastructure for automated compliance.
What retail users will notice
The user experience is moving from annual paper envelopes to a continuous digital workflow. Tax season is becoming a document center notification rather than a mailbox event.
For users accustomed to physical forms as reminders of their submissions, the shift creates new ways to miss deadlines.
Exchanges integrate consent to the loading or account settings offered as standard terms of the platform. Email forwarding relies on users maintaining current contact information and checking spam filters.
In-app document hubs integrate tax forms into notification flows that manage business approvals, security alerts and promotions. The seven-year retention requirement means that historical forms remain available, but only if users know to look for them.
Coinbase’s 2025 10-K reports 9.2 million monthly users transacting and $376 billion in assets on the platform. Other major exchanges have comparable scale.
If even a part of the tax documents are accepted as mandatory electronic consent, the volume of tax documents moving only through digital channels will become significant.
The chart shows the difference between reported crypto sales and estimated ownership, with the IRS targeting up to 75% of non-compliance by enforcing $28 billion.Execution becomes more invisible
A critical difference: this proposal changes the way clients’ forms are accepted, not the way the IRS accepts them.
The broker’s reporting to the government remains unchanged. An exchange that switches to app-only transfers will still provide the same information as the IRS.
The IRS clearly states that taxpayers must report digital asset transactions regardless of whether they receive a Form 1099-DA. The agency emphasizes accounting: taxpayers must keep basic records to calculate profits and losses, especially at the entry stage when many forms do not include the basis.
For 2025 transactions, brokers typically only report gross revenue. Basic reporting will begin in 2026 for certain assets held at the same broker from purchase.
This creates a compliance gap where users need to export their trading history, even if they form. The e-delivery offering makes historical data access more dependent on platform tools such as document hubs, CSV export and API access, rather than postal statements.
From a performance perspective, the switch is efficient. Returns are submitted to the IRS digitally regardless of the client’s delivery method. Automatic reconciliation compares documents with broker reports without manual intervention.
Users who miss app-based notifications still face potential whistleblower warnings, penalties, and interest. The system becomes less visible to unwary users while remaining fully visible to the IRS.
What will happen next?
The proposal is open for public review until May 5, 2026. If finalized, it would apply to returns filed on January 1 of the calendar year following publication, meaning the primary impact would be the 2027 tax season or later.
Whether or not exchanges accept mandatory electronic transmission is a business decision. The proposal authorizes, not mandates. Some brokers maintain paper options as customer service, while others consider digital only as simpler.
Adoption rates determine how many users are faced with an “opt-out or opt-out” choice.
Users should assume that electronic transfers will become standard once permitted on major platforms.
Consider your exchange email setup as a critical tax infrastructure. Make sure contact information remains current. Enable document notifications. Check your spam filters before February 15th when entries are due. Regularly download and backup trade history, especially for transactions on different platforms, where no single broker has complete base information.
The broader context is the global convergence towards standardized crypto tax reporting.
The OECD’s crypto-asset reporting framework is adopted across jurisdictions. The EU’s DAC8 Directive expands reporting to cover crypto assets. The U.S. electronic transfer proposal follows a multi-year plan in which the informal crypto premium is reduced to the return of traditional securities information.
Crypto tax reporting doesn’t disappear in apps to make compliance easier. It moves within digital rails to make performance more automatic and harder to ignore.
The IRS didn’t cut a paper trail. It allows the path from the mailbox to the platform, where the broker’s copies still go to the government, while the client’s copies become just another notification on a busy interface.
The post rejection of the new IRS crypto tax forms may cost you the value of your exchange account initially on CryptoSlate.
