What is a non-covered security in Form 1099-DA?

  In Form 1099-DA, a non-covered security refers to any digital asset that does not qualify as a covered security. This means that the broker is not obligated to report its cost basis to the IRS. Examples of non-covered securities include:

• Digital assets that were not held by the broker when acquired.

• Assets acquired before January 1, 2026.

• Assets that were transferred into the broker’s custodial account instead of being purchased initially there.

• Assets acquired by an exempt recipient (such as specific organizations or foreign persons) that are not subject to reporting.

Certain assets owned by a foreign intermediary or flow-through entity, as defined in IRS regulations.