Your goal is always to calculate and report complete and accurate gains and losses and other income as well as everything else on your tax return, business and/or personal. The goal for eliminating 1099-DAs is to minimize your headaches and your tax compliance cost whether you hire a professional or not.
This is NOT about circumventing compliance but rather understanding what triggers broker reporting. Here's the 1099-DA elimination playbook for generating minimal to zero 1099-DAs.
1099-DA core strategy
Only buy on exchanges, then transfer out. Purchase crypto on centralized exchanges using USD or USDC (or other stablecoins), then immediately transfer to your self-custody wallet or DEX. No sales on crypto exchanges means no 1099-DAs get generated except for stablecoin sales.
Conduct all trading on DEXs. Execute all crypto-to-crypto swaps on decentralized exchanges (e.g., Uniswap, SushiSwap). DEXs don't issue 1099-DAs, but you still have to report these transactions.
Only sell stablecoins on exchanges. Swap your crypto for stablecoins (USDC, USDT) on a DEX and then send those stablecoins to a centralized exchange and sell for USD.
Why this works
Centralized exchanges don't have to report qualified stablecoin sales totaling less than $10,000 per year. Total stablecoin sales above $10,000 are reported on a single 1099-DA without any cost basis. Then simply report a single transaction with proceeds from the 1099-DA and a cost basis matching the proceeds number.
For example, if you get a Coinbase 1099-DA with $22,348 USDC proceeds then you should report a $22,348 cost basis. The actual cost basis in this example could be a little bit more or less than the proceeds, so use the actual number if you have it. Otherwise, plug the cost basis with the gross proceeds number.
Master cross-chain bridges. If your exchange doesn't accept stablecoins from every network (for example, Bitstamp accepts ETH-USDC but not SUI-USDC), use cross-chain bridges to get your SUI-USDC from the SUI network to the Ethereum network. Then send ETH-USDC to Bitstamp and sell for USD. In this example, use the SUI Wormhole Bridge.
Complete workflow example for Bob:
- Buy: Bob buys $50,000 of ETH on Coinbase using USD.
- Transfer: He transfers the ETH to his MetaMask wallet.
- Swap: He actively trades on Uniswap, Curve, SushiSwap across multiple chains.
- Convert: Bob needs $30,000 USD so he swaps various tokens on DEXs for 30,000 USDC.
- Bridge: He bridges USDC from SUI to Ethereum and then sends ETH-USDC to Bitstamp Exchange.
- Withdraw: Bob sells 30,000 USDC on Bitstamp for USD and withdraws to his bank account.
The goal is to produce zero 1099-DAs by keeping stablecoin sales under $10,000 per exchange or one stablecoin 1099-DA if total sales of stables are above $10,000.
Report every swap and trade using your crypto tax software as your main source for gains and losses. However, you've eliminated the reconciliation nightmare of matching your gains and losses to multiple detailed 1099-DAs.
The good news? Crypto exchanges WILL aggregate 1099-DA forms by asset and holding period.
Based on the IRS instructions, here's how 1099-DA reporting will work:
Aggregation structure
Exchanges must report sales on separate Forms 1099-DA for: (1) Covered securities with short-term gain or loss, (2) Covered securities with long-term gain or loss, (3) Noncovered securities, and (4) First sales by creator/minter if reporting NFTs.
This means:
- Per cryptocurrency type (e.g., BTC, ETH, SOL)
- Per holding period (short-term vs. long-term)
- Aggregated within each category
Practical example:
If you made 100 BTC trades on Coinbase in 2025:
- You'd receive ONE 1099-DA for short-term BTC transactions (showing aggregate proceeds, cost basis, and gain/loss)
- You'd receive ONE 1099-DA for long-term BTC transactions (if applicable)
- NOT 100 separate forms
Key Takeaway
The elimination strategy doesn't reduce your tax obligations rather it reduces your time, expense and energy put into digital asset tax compliance. It also reduces the burden and the risk of getting and managing IRS matching notices.
WEIGH IN 💬
How are you planning to handle 1099-DA reporting in 2026 – stick with CEX trading as usual, or test-drive a DEX-first, low-reporting workflow like this? Share your thoughts down below 👇.
As always, your goal is to get a Crypto Bullseye™.
Yours in crypto,
