Why crypto reporting is now a data engineering problem

On Jan 8, 2026, the IRS kicked off filing season messaging and made a point of calling out Form 1099-DA. That is the tell. Digital asset reporting is moving from “new rule” to “operational reality.”

This year, more teams are going to learn the hard way that crypto reporting is not primarily a compliance problem.

It is a data engineering problem.

The signal: information reporting is becoming normal

Form 1099-DA is designed to report digital asset transaction proceeds. It pulls crypto activity into the same enforcement machinery used for other third-party reporting.

The practical implication is simple: mismatches and gaps get noticed faster.

Even more important, the IRS is explicit that taxpayers must report taxable income even if they do not receive a form. So “we did not get a 1099” is not a completeness strategy.

Primary sources:

• IRS filing season release (IR-2026-02): https://www.irs.gov/newsroom/irs-announces-first-day-of-2026-filing-season-online-tools-and-resources-help-with-tax-filing
• IRS explainer: https://www.irs.gov/businesses/understanding-your-form-1099-da

Why 1099-DA does not solve the hard part

1099-DA is not a full financial record of your crypto reality. It is an output. The hard part is the input pipeline.

Most teams still have to engineer, document, and defend all the things a proceeds form does not provide reliably, including:

• basis and lot-level continuity across transfers
• consistent classification across products and protocols
• income characterization for staking, DeFi yields, and protocol-native flows
• a complete audit trail across custodial and non-custodial activity

That is before you deal with the real-world mess: multiple wallets, multiple exchanges, internal transfers, bridging, wrapped or receipt tokens, and protocol-specific mechanics that do not map cleanly to legacy accounting categories.

2026 is different: multi-jurisdiction reporting goes live at the same time

For the first time, multiple jurisdictions are actively moving toward enforcement of crypto reporting requirements in parallel. Whether you are thinking about the EU’s DAC8 framework, the OECD’s CARF, the UK’s aligned regime, or the US 1099-DA rollout, the shared requirement is the same:

deterministic, auditable, globally consistent financial data derived from blockchain activity.

That shared requirement is why jurisdiction-by-jurisdiction patches break. They create inconsistent classifications, lots, and audit trails.

The minimum technical capability stack

If you want your reporting to hold up in audit and in regulator questions, you need a pipeline that can produce the same answers repeatedly.

Here is the baseline stack:

1) Complete ingestion and normalization

• on-chain activity across all relevant addresses
• custodial and exchange records
• fees, internal transfers, and operational movements that do not show up cleanly in broker exports
• address inventory and scope governance

2) Deterministic classification

• a stable taxonomy that maps raw events into reporting categories
• protocol-derived logic where available
• explicit exception handling with logs and approvals

3) Lot-level cost basis with transfer integrity

• wallet-by-wallet lots
• transfer in and transfer out preservation of lots
• documented, reproducible lot selection methods

4) Evidence pack outputs

• cutoff policy and timestamps
• reconciliations from source activity to reporting outputs and to GL
• exception logs for missing basis, unmatched transfers, and classification edge cases
• outputs that are reperformable by a third party without reverse engineering your process

What teams should do now

If you are a controller, a tax leader, an auditor, or an operator supporting institutional crypto activity, the 2026 playbook is not “wait for more clarity.”

It is to standardize the evidence chain every close:

• completeness
• classification
• lots and basis
• audit trail retention
• reconciliations and exception management

That is the work that prevents year-end chaos.

How NODE40 fits

NODE40 is built for deterministic, audit-ready digital asset reporting. The goal is not more dashboards. The goal is a repeatable evidence chain that can stand up across stakeholders and jurisdictions.