The Internal Revenue Service previewed a draft version of the Form 1099-DA on Friday for crypto brokers reporting on the proceeds of digital asset transactions to their customers.

The form is the result of the bipartisan Infrastructure and Investment Jobs Act that President Biden signed into law in 2021. It classifies crypto exchanges and trading platforms as brokers and requires them to report on their customer’s gains and losses to the IRS every year starting with tax year 2025. Customers and the IRS would start receiving the forms in time for the 2026 tax season. The IRS issued proposed regulations last year on the new requirements.

Crypto brokers were supposed to start tracking the transactions last year. Under the proposed regulations a broker providing custodial services for digital asset would be required to provide adjusted basis reporting for sales of digital assets effected on or after Jan. 1, 2026, if the digital asset is acquired and continuously held by that broker in the customer’s account on or after Jan. 1, 2023.

The preview coincides with an eagerly anticipated “Bitcoin halving” event that’s expected to drive up the value of that particular cryptocurrency.

“To celebrate Bitcoin Halving Day, the IRS has gifted the digital asset community with a draft IRS Form 1099-DA – the form that ‘brokers’ are supposed to begin using in 2025 to report digital asset transactions to customers,” said Tony Tuths, a principal and alternative investments and digital asset tax practice leader at KPMG, in a statement. “While we are still waiting on final regulations to see who qualifies as a broker and for an exact timeline for reporting, the draft form is telling. The ‘Broker type’ box lists brokers such as Unhosted Wallet Provider, Digital Asset Payment Processor and Kiosk Operator. This may indicate that Treasury is not backing down from its expansive scope definition of ‘broker,’ which will drag DeFi and wallet providers into reporting. Also noteworthy is Box 10b (noncovered security), still suggesting that cost basis was to be tracked from 1/1/2023 (which it’s likely not everyone has been doing).”

Crypto companies have spent heavily on lobbying lawmakers and regulators in Washington before and after the infrastructure law was passed to limit their exposure to the reporting requirements in an effort to narrowly define the meaning of the term “broker.” The inclusion of those specific categories on the form provides some clarity on who will be expected to issue the forms, and which crypto investors can expect to receive them.

Other boxes shown on the draft form provide some hints about how the final regulations will apply.

“The inclusion of a “wash sale loss disallowed” Box 1i does not mean that crypto is subject to wash sale rules,” said Jessalyn Dean, vice president of tax information reporting at Ledgible, a crypto tax and accounting software company, in an article on the Ledgible website. “It is included for purposes of digital assets that are also stock or securities already subject to wash sale rules (e.g. certain tokenized equities).”

Wash sale rules can be a concern for crypto investors. If investors repurchase their crypto assets soon after selling them, that could mean the wash sale rule, which is intended to prevent investors from claiming tax losses on assets they continue to own, comes into play.

A checkbox on the draft form in Box 11d says, “Check if sale is not recorded on the distributed ledger.”

“This is necessary because very often digital asset addresses or transaction IDs cannot be provided because transactions occurred within internal record keeping systems,” Dean explained.

Another checkbox on the form may leave some brokers confused about what to do. “Box 5 is for a broker to indicate that a loss is non-deductible due to a ‘reportable change in control or capital structure’ and references Form 8949 and Schedule D Instructions,” Dean wrote. “However, neither of those instructions give any guidance on what kind of events in crypto and digital assets could apply in these circumstances. They defer to the broker to simply figure it out in the dark with the further statement that ‘The broker should advise you of any losses on a separate statement.'”

This may be an area where the Treasury and the IRS will need to provide further guidance in the final regulations or a FAQ page.