On March 5, 2026, the IRS and Treasury released proposed regulations (REG-105064-25) that would change how digital asset brokers may obtain consent to electronically furnish payee statements based on Form 1099-DA, Digital Asset Proceeds From Broker Transactions, creating an alternative to the longstanding requirement to provide paper statements unless the customer consents to electronic delivery. Under the proposed regulations, digital asset brokers would not have to provide payee statements on paper to customers who refuse electronic delivery. Instead, brokers could choose to end their business relationship with such customers.

The IRS and Treasury simultaneously released Notice 2026-4, requesting comments on whether the electronic consent rules for other forms should be updated, given the expanded use of the internet for communications.

Background

Under the final regulations on digital asset reporting, digital asset brokers must file and furnish the new Forms 1099-DA for applicable digital asset transactions occurring on or after January 1, 2025 (see Tax Alerts 2024-1385 and 2025-2354).

IRC Section 6045 requires digital asset brokers to file information returns — including those reporting digital asset sales — and to furnish corresponding payee statements to customers. Payee statements must show the information reported to the IRS, including gross proceeds and identifying customer information.

Under current regulations and Publication 1179, digital asset brokers (as well as other payors reporting on Form 1099) may furnish payee statements electronically only if the customer affirmatively consents and retains the right to withdraw consent. Digital asset brokers must otherwise issue paper statements and must provide paper statements to any nonconsenting or withdrawing customer.

According to the Preamble, digital asset brokers argued that these requirements are unnecessary, because all of their customers trade and communicate with them electronically, and impractical, because some customers may have hundreds or thousands of reportable transactions, resulting in voluminous paper statements.

Proposed regulations

Alternative consent framework for digital asset brokers

Prop. Treas. Reg Section 1.6045-1(k)(5) would allow digital asset brokers to obtain customer consent to electronically furnish payee statements without offering a paper option. Digital asset brokers could terminate their business relationship with customers who decline to consent. Customers generally could not withdraw consent unless the digital asset broker chooses to permit it. The proposed regulations would only apply to the consent procedures for Form 1099-DA payee statements and not to other payee statements, such as Form 1099-B, Proceeds from Broker and Barter Exchange Transactions.

Qualified electronic delivery methods

A digital asset broker furnishing payee statements electronically would have to use a qualified electronic delivery method, defined in one of two ways (note the different requirements between the payee statement and the notice that the statement is available).

Digital asset brokers could post the payee statement to an electronically accessible specified location, such as a website, mobile device app or other online platform and then email customers a notice that the payee statement is available. The notice would have to include in capital letters "IMPORTANT TAX RETURN DOCUMENT AVAILABLE" on the subject line of the email. The notice would also have to include instructions for accessing and printing the payee statement. If requested by the customer, the broker would be required provide another notice using an alternative method, such as a text message, in-app messaging or physical mail. The payee statement would be considered furnished on the latest date the digital asset broker (1) posts the payee statement to the specified location, (2) emails the notice that the payee statement has been posted, or (3) sends the requested notice (if the customer asked for one) using an additional communication method.

Alternatively, digital asset brokers could directly transmit the payee statements by email (by attaching the payee statements or including them in the email). The email would have to include instructions for accessing and printing the payee statement and include the phrase "IMPORTANT TAX RETURN DOCUMENT AVAILABLE" in the subject line. The payee statement would be considered furnished on the later of the dates the digital asset broker (1) sends the email with the payee statement attached or included; or (2) sends any notice by an alternative method informing the customer that the payee statement has been transmitted.

Notice and redelivery requirements

If an emailed notice or emailed transmittal is returned as undeliverable, digital asset brokers would have to do the following:

• For posted payee statements, send the notice by physical mail or private delivery service within 30 days unless a corrected email address is successfully used
• For direct transmittals, physically mail the original payee statement within 30 days unless a corrected email address is used within five business days

Digital asset brokers that originally posted the payee statement on their website would also have to post any corrected payee statement there — along with any requested notices about that posting — and notify the customer within five business days. If the original payee statement was sent directly to the customer, the digital asset broker would be required to send the corrected payee statement directly and provide any applicable requested notices within five business days of transmission.

Positive consent requirements

Customers would have to "positively" consent to receive the payee statement in electronic format. Positive consent could be shown if the customer performs an explicit action, such as checking a box, clicking a button or completing a fill-in screen. Before or at the time of consent, digital asset brokers would have to provide a clear disclosure describing:

• Scope of consent (the consent applies to all payee statements)
• Hardware/software requirements
• Qualified electronic delivery method
• Notification method
• Consequences of non-consent (e.g., service limitations)
• Withdrawal of consent (whether withdrawal is allowed)
• Where to find this information

Digital asset brokers operating exclusively through kiosks or as a processor of digital asset payments (PDAP broker) would have to additionally send the disclosure by email or mail within five business days of the customer's explicit action to provide positive consent.

Continuing disclosure obligations

Digital asset brokers would have to maintain up-to-date disclosure information on their website or platform and, provide revised disclosures to kiosk/PDAP broker customers via email or mail within five business days of any update. Customers who request additional communication methods would have to receive updates via those methods as well.

Access period

Digital asset brokers would have to keep posted payee statements accessible through October 15 of the year following the calendar year to which the payee statements relate. Additionally, digital asset brokers would have to maintain access to corrected payee statements through October 15 of the year following the calendar year to which the statements relate or 90 days after the corrected statements are posted, whichever is later. The posted payee statements must be retained for seven years.

Composite payee statements

A payee statement could be included in an electronically furnished composite statement only if the digital asset broker separately obtains valid electronic consent for furnishing each form included under the existing rules for obtaining consent, which require giving the customer an opt-out to receive paper forms. This would apply to payee statements for both Form 1099-DA and 1099-B. Providing the Form 1099-B or other forms included in the composite without a proper consent would constitute a failure to furnish that form.

EY observes: In addition to sales proceeds, many digital asset brokers pay their customers income, such as staking rewards reportable on Form 1099-MISC and interest reportable on Form 1099-INT. In general, brokers would prefer to provide a single statement combining everything they report to a customer, but the existing rules on composite statements in Publication 1179 prevent the inclusion of Form 1099-MISC, except for royalties or substitute payments in lieu of dividends and interest. While the IRS and Treasury are seeking comments on allowing staking rewards to be reported on composite statements, it appears that a digital asset broker may need to allow a customer who receives income reportable on Form 1099-MISC to opt out and receive a paper Form 1099-MISC, even though the customer is effectively required to receive Form 1099-DA electronically.

Request for comments

Notice 2026-4, released at the same time as the proposed regulations, requested comments on updating the rules for obtaining consent to electronically furnish Forms 1099-B. The Notice points out that access to the internet, computers and smartphones is nearly universal now but also expresses concern that some taxpayers may have limited "facility" with devices and may prefer to receive important documents on paper. Accordingly, the Notice requests comments on how best to minimize the burden on brokers by changing the consent rules for Forms 1099-B and associated composite statements, while accommodating the elderly and persons with disabilities. The Notice also requests comments on whether and how electronic consent rules should change for other forms required under IRC Sections 6041—6050AA.

Comments are due on May 23, 2026.