1099-DA and stablecoins: What and when to report
Dec 2, 2025・5 min read
Stablecoins have long been essential in crypto trading and the decentralized finance (DeFi) sector, but new regulatory developments point to their growing acceptance as mainstream assets. Laws like the GENIUS Act in the United States and Markets in Crypto-Assets Regulation (MiCA) in the European Union show lawmakers are interested in making these digital assets more compliant with local finance laws.
The growing movement toward mainstream stablecoin adoption extends to taxes. But just because traders exchanged stablecoins within a tax year doesn’t necessarily mean they’ll automatically be reported on Form 1099-DA. There may be circumstances where Form 1099-DA doesn’t report stablecoin transactions that have tax implications.
Understanding the rules covering 1099-DA and stablecoins goes a long way toward helping crypto traders understand tax compliance. Read on to learn the details.
Optional reporting method for stablecoins
The IRS allows brokers to use an optional aggregate reporting method for certain stablecoin transactions. Instead of reporting each sale individually, a broker may combine all of a customer’s designated sales for a single qualifying stablecoin and report those totals on one Form 1099-DA per stablecoin.
When a broker uses this method, they report only the aggregate gross proceeds for that qualifying stablecoin (after reducing for allocable transaction costs) and may leave acquisition dates, cost basis, and several other boxes blank. This optional method applies only to qualifying stablecoins and only to designated sales.
If a customer’s total designated sales of qualifying stablecoins exceed $10,000 for the year, the broker must file a Form 1099-DA for each qualifying stablecoin the customer sold, even if a particular stablecoin is below the $10,000 mark. If total designated sales are below this amount, none of the designated stablecoin sales need to be reported under the optional method.
What is a qualifying stablecoin?
Not every cryptocurrency that functions as a stablecoin on exchanges or DeFi protocols can be reported under the optional aggregate method on Form 1099-DA. Because this method applies only to certain stablecoins, the IRS has defined specific requirements a digital asset must meet to be treated as a qualifying stablecoin.
A stablecoin is a qualifying stablecoin only if it meets three criteria:
- Mirrors a fiat currency’s price: All qualifying stablecoins have a one-to-one valuation (or “peg”) with a fiat currency. Typically, these stablecoins have the same price as the U.S. dollar, but a few follow the prices of foreign currencies like the euro.
- Has an eligible stabilization mechanism: The stablecoin must either (1) satisfy a results test, meaning its value does not fluctuate by more than 3% during any 10-day period, or (2) meet a design test, meaning the issuer is obligated to redeem the token at a 1:1 rate for the fiat currency it tracks.
- Accepted as a form of payment: The stablecoin must be accepted by parties other than its issuer, such as businesses, platforms, or brokers, in exchange for goods, services, or digital assets.
The above points apply to all of the world’s most-traded stablecoins. Reserve-backed projects like Tether Limited’s USDT and Circle’s USD Coin (USDC), are most likely to meet the IRS definition of a qualifying stablecoin. However, algorithmic or decentralized stablecoins may fail the stabilization tests or lack an issuer capable of offering 1:1 redemption and therefore may not qualify for optional aggregate reporting.
Designated stablecoin sales for 1099-DA reporting
Under the optional aggregate reporting method, a broker only reports certain qualifying stablecoin transactions, called designated sales. A designated sale is a sale of a qualifying stablecoin for cash or for another qualifying stablecoin; exchanges for Bitcoin (BTC), Ethereum (ETH), or any other non-qualifying digital asset are not designated sales.
If a qualifying stablecoin sale is not a designated sale, the broker does not report it under the optional method and is not required to report it elsewhere under this method.
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3 examples of 1099-DA stablecoin thresholds in practice
Understanding how the optional reporting rules apply can be easier with concrete examples. Below are three simple scenarios showing how qualifying stablecoins, designated sales, and the $10,000 threshold work together for Form 1099-DA reporting.
Total designated sales below $10,000: no 1099-DA required
A customer sells $6,000 of USDC for cash during the year. USDC is a qualifying stablecoin, and selling it for cash is a designated sale. However, because the customer’s total designated sales of all qualifying stablecoins are under $10,000, the broker does not need to issue a Form 1099-DA under the optional aggregate reporting method. The transaction is still taxable, and the customer must report any gain or loss on their tax return.
Total designated sales exceed $10,000: reporting required for each qualifying stablecoin
A customer sells $8,000 of USDC for cash and later sells $5,000 of USDT for cash. Both assets are qualifying stablecoins, and both transactions are designated sales. Because the customer’s combined designated sales exceed $10,000, the broker must issue separate Forms 1099-DA for each qualifying stablecoin the customer sold, one for USDC and one for USDT. Each form will show the aggregate gross proceeds for that specific stablecoin.
Qualifying stablecoin to non-qualifying stablecoin
A customer exchanges $12,000 of USDC for ETH. Although USDC is a qualifying stablecoin, this transaction is not a designated sale because the customer exchanged it for a non-qualifying digital asset. Since it is not a designated sale, the broker does not report it under the optional method. The exchange is still a taxable event, and the customer must report any gain or loss on their return.
Swapping stablecoins? Stay compliant with CoinTracker
Whether you’re trading, staking, or yield farming with stablecoins, CoinTracker has the tools to keep detailed records of all your Web3 activities. Simply link exchange APIs and public wallet addresses to CoinTracker’s Portfolio Tracker to see your complete transaction history and import it into U.S. tax-compliant forms like Form 8949 and Schedule D. For even greater convenience, CoinTracker has seamless integrations with popular tax software like TurboTax and H&R Block to report your crypto gains, losses, and income.
Download a free CoinTracker Portfolio Tracker account today and see how simple it is to start tracking your crypto transactions.
Disclaimer: This post is informational only and is not intended as tax advice. For tax advice, please consult a tax professional.
FAQ
What’s a qualifying stablecoin under IRS rules?
A qualifying stablecoin is a digital asset that tracks a single fiat currency 1:1, meets IRS stabilization requirements, and is accepted as payment by parties other than its issuer. Only digital assets that meet all three criteria are treated as qualifying stablecoins for the optional aggregate reporting method on Form 1099-DA.
Do all stablecoins require 1099-DA reporting?
No. Under the optional reporting method, only designated sales of qualifying stablecoins are reported. Reporting is required only when a customer’s total designated sales of qualifying stablecoins exceed $10,000 for the year. Brokers that do not report under the optional reporting method would report every stablecoin disposition like any other digital asset.
My stablecoin dispositions aren’t reported. Are they still taxable?
Yes. A sale or exchange of any digital asset, including stablecoins, is a taxable event. Even if a transaction does not appear on a Form 1099-DA, the taxpayer must report any gain or loss on their income tax return.
How does the $10,000 threshold work?
If a customer’s total designated sales of qualifying stablecoins exceed $10,000 for the year, the broker must file Forms 1099-DA under the optional method. Once this threshold is met, the broker must report designated sales for each qualifying stablecoin the customer sold, even if a particular stablecoin’s own total is under $10,000.
What’s the difference between designated and non-designated sales?
A designated sale is a sale of a qualifying stablecoin for cash or for another qualifying stablecoin. These are the only transactions eligible for the optional aggregate reporting method.
A non-designated sale occurs when a qualifying stablecoin is exchanged for any non-qualifying digital asset (such as BTC or ETH). These sales are still taxable but are not included in the optional aggregate reporting method.