Coinbase Chief Policy Officer Faryar Shirzad has publicly criticized the U.S. tax treatment of cryptocurrency, calling the current framework a 'compliance nightmare' that treats every on-chain transaction—including paying gas fees—as a taxable event.
Gas Fees Become Tax Events, Users Overwhelmed
The root problem: U.S. tax law classifies crypto as 'property.' This means any transfer—whether paying Ethereum gas fees or buying coffee with stablecoins—technically counts as a disposal of assets, requiring users to record gains or losses for each transaction. Shirzad argues the rules were designed for '20th-century money' and make no sense for digital assets.
Coinbase customer support data shows a 34% year-over-year increase in tax-related inquiries, as users struggle to track tiny transactions. Shirzad described the burden as 'wasteful and suffocating.'
Millions of 1099-DA Forms, Many for Pennies
The IRS's new crypto reporting rules require exchanges to send Form 1099-DA to users. Coinbase estimates it will issue millions of these forms for tax year 2025, with a large portion covering transactions under $600—including hundreds of thousands under $1. The administrative overhead frustrates both users and exchanges.
Shirzad warned that compliance pressure will spike this tax season unless Congress acts. Several crypto bills are pending, but tax reform lags behind market growth.
Coinbase Calls for Small-Transaction Exemption
Coinbase wants structural reform to align tax rules with crypto's operational logic. One concrete proposal: exempt small daily transactions—such as those below a certain dollar threshold—from reporting, following models adopted by other countries. Without such relief, Shirzad said, the U.S. risks stifling innovation under a mountain of pointless paperwork.