In a custodial wallet a third party (usually an exchange) holds the private keys; in a non-custodial wallet you hold them. Custodians report to the IRS; you do not.
Custodial platforms must verify identity and, since 2025 transactions, report sales on Form 1099-DA. Non-custodial wallets and DeFi front ends were excluded from broker reporting after a 2025 repeal.
The absence of a form does not remove the obligation, and analytics link non-custodial addresses to identities through the custodial accounts they interact with. KYC and blockchain analytics.
IRS crypto audits and letters, unreported years, theft loss opinions, and returns that survive an audit.
See the practice page →Our tax attorneys handle IRS audits, crypto tax, offshore disclosures, and opinion letters for clients nationwide. Consultations are confidential.
Definitions are general information, not legal advice, and may not reflect the most recent changes in law.
IRS letters, audits, unreported years, returns.
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