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Coinbase Pushes Back on U.S. Crypto Tax Reporting Rules.
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.