1099-DA and Why Most Firms Aren’t Ready
The rollout of Form 1099-DA marks a turning point in how the IRS will track digital asset activity. For the first time, centralized platforms will be required to report digital asset transactions to the federal government, generating billions of new information returns.
But while the regulatory spotlight is intensifying, the readiness across brokers, funds, and service providers remains uneven in ways that could expose firms to serious audit risk and reputational damage.
A Firehose of Data, with No Standard Interpretation
The new requirement means brokers must report asset sales, transfers, and potentially basis information to the IRS. But the rulebook on how to handle staking rewards, wrapped tokens, or DeFi transaction elements remains vague. This creates both compliance risk and interpretive risk.
Firms that take a minimal-effort approach to reporting may appear compliant on the surface—until their clients get audited. And when the IRS starts cross-referencing 1099-DA data with filed tax returns, gaps and inconsistencies will trigger red flags. This is where preparation matters. At NODE40, we work with thoughtful, forward-thinking clients who recognize the complexity of operating in a highly regulated environment. Many of them come from traditional finance and understand that proper financial risk mitigation is a differentiator. They use their experience to prepare thoroughly and mitigate risk proactively—because defensibility is a strategic advantage, not an afterthought.
Why Generic Tools Won’t Hold Up
Most crypto tax tools are built for retail investors and may work when volume is low and sources are simple. But institutional stakeholders face a very different reality.
- Funds and brokers must match activity across wallets, custodians, exchanges, and protocols.
- Controllers and CFOs need clear, consistent methodology that aligns with internal policy.
- Auditors want a transaction-level audit trail that explains every number on a financial statement.
None of that comes from raw data. Data alone doesn’t explain intent, classification, or context—it needs to be transformed into structured insight that supports decision-making and withstands external scrutiny.
How NODE40 Prepares You for What’s Next
That’s why NODE40 was built with defensibility in mind. Our platform doesn’t just tally activity, it documents every transaction with precision, context, and continuity.
We help you:
- Trace asset origin and movement across on-chain and off-chain environments
- Apply consistent lot-relief and classification logic even when assets move through wallets or protocols
- Produce reconciled financial reports that hold up under regulatory and investor scrutiny
We don’t just help you report. We help you prove it.
Get Ahead of the Scrutiny
Firms that treat 1099-DA as a checkbox will struggle when follow-up questions arise. The ones that thrive will be those that can tell a complete story: asset by asset, wallet by wallet, block by block.
If you want to be ready when the audits start, the time to prepare is now.
Confidence starts long before the form is filed.
