Cryptocurrency exchange Coinbase is criticizing new U.S. Tax reporting rules for digital assets, arguing they are overly complex and will create an administrative burden for millions of users, particularly those making small transactions. The company’s concerns center on the new IRS Form 1099-DA, which is being rolled out for the 2026 tax season and aims to standardize crypto tax reporting.
Coinbase, the largest U.S. Cryptocurrency exchange, is currently sending out the new 1099-DA forms to millions of American crypto holders. Lawrence Zlatkin, Coinbase’s VP of tax, stated the rules require reporting transactions in stablecoins – digital currencies designed to maintain a stable value – and even the minimal fees associated with blockchain transactions, known as “gas” fees. “Frankly, [small retail] transactional flow is so small, I just don’t recognize why we’re spending efforts as a country focused on them,” Zlatkin said in an interview. He questioned the value of requiring individuals to report gains or losses on transactions as small as $50.
The new rules require exchanges to share details of customer digital asset transactions with the IRS, with customers receiving a copy via the 1099-DA form to reconcile their own gains and losses. However, for the initial rollout in 2026, Coinbase will only report the gross proceeds from digital asset sales, not the cost basis or net gains. This means traders will require to independently calculate their cost basis – the original purchase price of the asset – and report it to the IRS. Coinbase plans to begin calculating cost basis on behalf of its customers for the following tax year.
This lack of cost basis reporting for the first year is expected to cause confusion, particularly for those unfamiliar with traditional investment reporting requirements. The complexity is compounded by the unique nature of cryptocurrency transactions, which often involve transfers between platforms and exchanges for various coins and tokens. “Ce n’est pas le monde dans lequel nous vivons aujourd’hui pour les actifs cryptographiques,” said Ian Unger, Coinbase’s director of tax reporting, highlighting the difference between crypto and traditional assets like stocks, where transfer records automatically convey cost basis information.
Zlatkin also criticized the inclusion of stablecoin transactions in the reporting requirements, arguing that because stablecoins are designed to maintain a fixed value, there is no actual gain or loss to report. “Avez-vous des revenus sur USDC ? Non, vous n’en avez pas. Alors pourquoi déclarons-nous les transactions USDC?” he asked, referring to the popular stablecoin USD Coin. He added that the current system unnecessarily “clutters” the tax system.
The reporting of even small “gas” fees also drew criticism from Zlatkin, who questioned whether the administrative cost of collecting revenue from these minimal transactions justified the effort. “Les frais de gaz peuvent être de 50 centimes, un dollar — devons-nous divulguer cela?” he said. “Est-ce une utilisation précieuse des ressources pour collecter des revenus?”
Coinbase stated it is working to educate investors and develop tools to simplify the process of calculating the cost basis for cryptocurrency transactions. The company acknowledged the challenges of aligning crypto tax reporting with traditional finance, but emphasized the need for a more streamlined and efficient system. The IRS has not yet responded to Coinbase’s criticisms.