This document is issued by Bitstamp to inform you of significant changes in United States federal tax law that directly affect your rights, obligations, and financial privacy as a holder and transferor of cryptocurrency and other digital assets. Please read this notice carefully and in its entirety before signing.
Section I — Governing Legislation
The following federal statutes and regulatory instruments constitute the legal basis for the reporting obligations described in this notice:
| Instrument | Citation | Effective Date |
|---|---|---|
| Infrastructure Investment and Jobs Act (IIJA) | Public Law 117-58, §80603 | November 15, 2021 |
| IRS Final Regulations — Digital Asset Broker Reporting | T.D. 9998 / 26 CFR §1.6045 | January 1, 2025 |
| IRS Form 1099-DA (Digital Asset Proceeds) | Rev. Proc. 2024-28 | Tax Year 2025 onward |
| Internal Revenue Code — Property Classification | 26 U.S.C. §1001, §1221 | Ongoing |
| DeFi Broker Rule Repeal | H.J.Res. 25, signed April 10, 2025 | April 10, 2025 |
Section II — IRS Form 1099-DA: Mandatory Broker Reporting
Effective January 1, 2025, the Internal Revenue Service has mandated that all custodial digital asset brokers — including cryptocurrency exchanges, payment processors, and hosted wallet providers — must issue Form 1099-DA (Digital Asset Proceeds from Broker Transactions) to both the taxpayer and the IRS for all covered digital asset sales and exchanges.
As Bitstamp, a company that facilitates the purchase of cryptocurrency on your behalf, we are legally classified as a custodial broker under 26 CFR §1.6045-1. This means we are required by law to collect, retain, and transmit the following information to the Internal Revenue Service:
- 01Gross proceeds from all digital asset sales or exchanges
- 02Transaction dates, types (buy, sell, exchange, transfer), and fair market values
- 03Your full legal name, Social Security Number (SSN) or Taxpayer Identification Number (TIN)
- 04Wallet addresses associated with your account, including self-custodial destination addresses
- 05Cost basis information (required for tax year 2026 onward)
- 06Any transfers to or from unhosted (self-custodial) wallets
Important: Even if you do not receive Form 1099-DA, you remain legally obligated under 26 U.S.C. §6011 to report all digital asset transactions on your federal income tax return. Failure to do so may result in civil penalties, interest, and potential criminal prosecution.
Section III — Self-Custodial Wallet Transfer Reporting
When you transfer cryptocurrency from your account with us to a self-custodial (unhosted) wallet — a wallet for which you hold the private keys — this transaction is subject to specific reporting obligations under the IIJA and IRS final regulations.
A. Record Destination Wallet Address
We must record and report the blockchain wallet address to which you transfer digital assets, as required under 26 CFR §1.6045-1(d)(2)(ii).
B. Report Transfer as a Taxable Event
Transfers to self-custodial wallets may be treated as a disposition for tax purposes if they involve an exchange of one digital asset for another, or if the transfer is part of a sale transaction.
C. Wallet-by-Wallet Cost Basis Tracking
Effective January 1, 2025, you may no longer use a universal cost basis method across multiple wallets. Each wallet must maintain its own basis, per IRS Notice 2025-7.
D. KYC/AML Compliance
Under the Bank Secrecy Act (31 U.S.C. §5311 et seq.) and FinCEN regulations, we are required to verify your identity and may be required to report certain large or suspicious transfers to self-custodial wallets to the Financial Crimes Enforcement Network (FinCEN).
Section IV — Tax Treatment of Digital Assets
The IRS classifies all cryptocurrency and digital assets as property, not currency, for federal income tax purposes. This classification, established in IRS Notice 2014-21 and reaffirmed in subsequent guidance, means the following tax principles apply to all of your digital asset activity:
| Activity | Tax Treatment | Applicable Rate |
|---|---|---|
| Sale of crypto for USD | Capital gain or loss | 0–20% (long-term) / 10–37% (short-term) |
| Crypto-to-crypto exchange | Capital gain or loss | 0–20% (long-term) / 10–37% (short-term) |
| Using crypto to purchase goods/services | Capital gain or loss | Based on holding period |
| Receiving crypto as payment | Ordinary income | 10–37% (marginal rate) |
| Mining or staking rewards | Ordinary income | 10–37% (+ self-employment tax) |
| Airdrops / forked coins received | Ordinary income at FMV | 10–37% (marginal rate) |
| Transfer to self-custodial wallet | Generally non-taxable* | N/A (unless part of exchange) |
* Wallet-to-wallet transfers between wallets you own are generally not taxable events, but you must maintain records to substantiate ownership in the event of an IRS audit.
Section V — Privacy Implications & Your Rights
The reporting requirements established under the IIJA and IRS final regulations have significant implications for the financial privacy of digital asset holders. The following concerns have been raised by legal scholars, privacy advocates, and members of Congress:
⚠ Blockchain Surveillance
The IRS has contracted with blockchain analytics firms, including Chainalysis and CipherTrace, to trace wallet addresses and link pseudonymous blockchain transactions to individual taxpayers. The reporting of your self-custodial wallet address to the IRS enables permanent, retroactive surveillance of your on-chain financial activity.
⚠ Overbroad 'Broker' Definition
Section 80603 of the IIJA defines "broker" so broadly that it could, in principle, encompass miners, validators, software developers, and node operators — parties who have no access to customer information and cannot practically comply with reporting requirements. This definition has been widely criticized as technically unworkable and constitutionally suspect.
⚠ Fourth Amendment Concerns
Multiple legal commentators have argued that mandatory reporting of wallet addresses and transaction histories to the IRS, without a warrant or individualized suspicion, may implicate Fourth Amendment protections against unreasonable searches and seizures, particularly under the "reasonable expectation of privacy" doctrine articulated in Carpenter v. United States, 585 U.S. 296 (2018).
You have the right to be informed of these obligations and to seek independent legal counsel before signing this document. Nothing in this notice constitutes legal advice. You are encouraged to consult a qualified tax attorney or CPA regarding your specific circumstances.
Section VI — Penalties for Non-Compliance
Failure to accurately report digital asset transactions on your federal income tax return may result in the following civil and criminal penalties under the Internal Revenue Code:
| Violation | Penalty | Code Section |
|---|---|---|
| Failure to report digital asset income | 20% accuracy-related penalty on underpayment | 26 U.S.C. §6662 |
| Substantial understatement of income | 20% penalty + interest from due date | 26 U.S.C. §6662(d) |
| Fraudulent failure to file | 15% per month, up to 75% of unpaid tax | 26 U.S.C. §6651(f) |
| Civil fraud penalty | 75% of the underpayment attributable to fraud | 26 U.S.C. §6663 |
| Criminal tax evasion | Up to $250,000 fine and/or 5 years imprisonment | 26 U.S.C. §7201 |
| Willful failure to file return | Up to $25,000 fine and/or 1 year imprisonment | 26 U.S.C. §7203 |
Section VII — Declaration of Non-Consent
The laws and regulations described in this document impose mandatory reporting obligations on both Bitstamp and on you as a digital asset holder. While compliance with these laws is legally required, you retain the right to formally register your objection to these reporting requirements as a matter of civic record, and to communicate your non-consent to the collection and disclosure of your financial data to the IRS and other government agencies beyond what is strictly required by law.
By checking the box below and signing this document, you are formally declaring that you do not consent to the surveillance, collection, and reporting of your digital asset transaction data, wallet addresses, and financial information to the Internal Revenue Service or any other government agency, to the fullest extent permitted by law. This declaration does not exempt you from legal obligations but constitutes a formal record of your objection.
Signatory & Document Record
Document Reference
CTN-2026-IRS-1099DA-001
Date of Notice
June 22, 2026
Issuing Entity
Bitstamp
Regulatory Basis
IIJA §80603 / 26 CFR §1.6045
Document Status
AWAITING CONSENT
Signature Method
DocuSign Electronic Signature
SIGNATORY SIGNATURE
DATE OF SIGNATURE
You must check "I do not consent" above before signing.