Coinbase has pushed back against the IRS’s new Form 1099-DA reporting rules, arguing that the framework adds major compliance work for both crypto platforms and retail users. The exchange said the rules sweep in stablecoin transactions such as USDC and even very small gas fees, despite the fact that these items often carry little or no meaningful taxable value.
Lawrence Zlatkin, Coinbase’s vice president of tax, said the requirement could produce a large volume of paperwork without generating meaningful tax revenue. He pointed to USDC as a clear example: because the asset is designed to track the U.S. dollar, Coinbase argues it should not be treated the same way as assets with price volatility. Zlatkin also said small trades such as $50 transactions are not the core target of tax enforcement.
Missing cost-basis data remains a core reporting problem
Coinbase said one of the biggest obstacles is that many crypto brokers do not have complete cost-basis information when assets arrive from external wallets. Without that data, users are left to manually reconcile gains and losses when filing with the IRS. That shifts a large part of the reporting burden onto individuals, especially those with transfers across platforms or self-custody wallets.
Ian Unger, Coinbase’s director of tax reporting, said the company plans to start calculating cost basis for users in the next tax year. Coinbase also intends to roll out tools and educational resources aimed at making digital asset tax reporting easier to manage.
Coinbase wants reporting tied to actual taxable income
Zlatkin said tax rules should focus on areas where there is real income, not on blockchain activity that adds complexity without producing revenue. He singled out low-value network fees, often only a few cents, and stablecoin balances that mirror the dollar. In Coinbase’s view, forcing those items into broad reporting requirements creates friction while doing little to improve tax collection.
The exchange also drew a comparison with traditional finance, where stock transfers usually come with clear cost-basis statements. Crypto transfers do not yet have that standard in place. Coinbase said that gap can confuse retail users, particularly those who are less familiar with wallet transfers or tax forms. According to the company, millions of Coinbase users are already receiving the new 1099-DA forms, with smaller retail traders likely to feel the impact most directly. Coinbase is urging regulators to revisit parts of the framework so reporting better reflects how digital assets actually work.