American cryptocurrency owners are anxious and uncertain regarding the new IRS tax regulations for this year.

Crypto tax platform, Awaken Tax, surveyed 1,000 cryptocurrency holders regarding a significant transition from self-reporting to automatic transaction reporting.

IRS building (Shutterstock)

Key points:

• New regulations require crypto exchanges such as Coinbase to submit a Form 1099-DA to the IRS this week.
• The regulations are described as a “blunt instrument” by Awaken Tax founder Andrew Duca, created by lawmakers unfamiliar with cryptocurrency.
• The responsibility lies with the crypto holder to “fill in” any gaps regarding their crypto acquisition costs and actual tax basis.

A recent survey of 1,000 American investors in digital currencies indicated that more than half are concerned about the possibility of receiving an IRS tax penalty this year as new transparency regulations affecting crypto exchanges are implemented.

The information gathered at the end of January by crypto tax platform Awaken Tax examined U.S. holders’ apprehensions regarding a substantial transition from self-disclosure to automatic transaction reporting.

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This has been instituted through the implementation of the “Digital Asset Proceeds From Broker Transactions,” or Form 1099-DA, which tens of millions of Americans will soon learn about in the coming month.

The new regulations aim to reduce crypto tax evasion and require brokers, including crypto exchange Coinbase (COIN), to report all sales and exchanges of digital assets that occurred during 2025 to the tax authorities.

The objective is to provide tax authorities with a clear view of investor gains and losses by granting access to customer data within exchanges for the first time, enabling the IRS to compare what crypto brokers report against what taxpayers submit.

While the intention is to eliminate any potential for error, the regulations are deemed a “blunt instrument,” designed by legislators lacking knowledge of cryptocurrency, according to Awaken Tax founder Andrew Duca.

“This implies that crypto is being treated similarly to stocks, but it does not function in that manner. Actual crypto users will move assets across various wallets and engage with decentralized finance (DeFi) protocols, employing rather intricate trading strategies,” Duca stated.

Companies like Coinbase can only provide data on the proceeds from crypto sales and cannot report the tax basis for any specific digital asset — usually the purchase price plus acquisition costs — which is essential for determining capital gains or losses upon its sale.

“Coinbase is unable to transmit the correct information, because if a person has bitcoin stored in a cold wallet ledger and sends it to Coinbase for sale, Coinbase lacks knowledge of the acquisition price, what it was purchased for. Therefore, Coinbase is submitting incorrect forms to the IRS. The 1099-DA form reflects proceeds, but it fails to record the tax basis,” Duca explained.

Coinbase is aware of the confusion this may create. The responsibility falls to the crypto holder to “fill in” any missing information regarding their crypto acquisition costs and actual tax basis using the IRS’s updated Form 8949, Duca noted.

Duca recognizes that compliance with crypto tax regulations is notably low: fewer than 20% of crypto holders report their obligations, he stated.

“This approach has not been well thought out and is rather detrimental for crypto users. However, it is the quickest and simplest solution they could implement,” Duca remarked. “They have simply introduced this rather blunt tool to attempt to raise compliance from 20% to 80% within a year.”