- Coinbase says new Internal Revenue Service Form 1099-DA rules create heavy reporting burdens for platforms and users.
- Reporting requirements include stablecoins like USD Coin and small gas fees that often have minimal taxable value.
- Coinbase plans tools to help users calculate cost basis and simplify crypto tax reporting next year.
Crypto exchange Coinbase has criticized new U.S. tax reporting requirements, saying they create unnecessary work for both platforms and retail investors. The exchange highlighted that the IRS now requires reporting for stablecoin transactions and minimal gas fees, despite these having little taxable value. Executives called for a revision that focuses on actual income rather than every small blockchain transaction.
Executives Warn About Burdensome Reporting
According to Coinbase, the new Form 1099-DA rules demand reporting on assets such as USDC, which by definition do not fluctuate in value. Lawrence Zlatkin, Coinbase’s vice president of tax, said the measure could generate massive paperwork without yielding meaningful revenue.
He stressed that small transactions, like $50 trades, are not a significant target for taxation. The reporting challenge increases because many crypto brokers lack full cost-basis information for transfers from external wallets.
Ian Unger, Coinbase’s director of tax reporting, explained that without cost-basis data, users must manually reconcile gains and losses with the IRS. Coinbase plans to begin calculating cost basis for users next tax year.
Stablecoins and Gas Fees Add Clutter
Zlatkin emphasized that stablecoin holdings, which mirror the U.S. dollar, should not require reporting. Similarly, gas fees, often just a few cents, add further complexity without meaningful tax impact. “We should focus on where there’s real income,” he said, “not small fees or stablecoins that generate no revenue.”
Coinbase executives said these requirements could confuse retail users, especially those unfamiliar with asset transfers or tax filings. The exchange noted that stock transfers usually come with clear cost-basis statements, a standard not yet available for crypto.
Coinbase Seeks To Educate Users
Moving forward, Coinbase aims to provide educational tools to simplify tax reporting for crypto holders. Unger explained that platforms hope to bridge gaps between exchanges and improve the accuracy of reported digital asset data. Meanwhile, millions of Coinbase users are already receiving the new 1099-DA forms, affecting particularly small retail traders, according to the company. The exchange urges regulators to reconsider parts of the new framework to better align reporting with how cryptocurrencies function.
