A new survey by Coinbase has laid bare the deep confusion among American investors about impending crypto tax rules. The '2026 Crypto Tax Readiness Report', which polled 3,000 respondents, found that only 49% correctly identified selling cryptocurrency as a taxable event. Alarmingly, nearly a quarter (about 25%) mistakenly believed that merely transferring digital assets between wallets could trigger a tax liability.
Cost basis records widely missing; self-custody preference doesn’t match practice
Survey participants used an average of 2.5 different wallets or trading platforms. While 83% said they preferred self-custody wallets, only 35% had ever adjusted the cost basis information for their holdings. The concept of cost basis — which calculates gains by subtracting the original purchase price from the sale price — remains confusing for many, highlighting an ongoing education gap.
Coinbase stated that new regulations will require the company to issue 1099-DA forms to over 4 million customers. Most of these forms will go to individuals whose annual returns fall below $600. Worse, more than 60% of users either lack cost basis records for their assets or have incomplete documentation, largely due to transfers between different trading venues.
Coinbase explained: “Currently, every stablecoin payment, minor DeFi transaction, and gas fee can technically be taxed. The administrative burden on ordinary users not only creates hassle but could also hinder innovation and widespread adoption.”
Experts: Standardized reporting helps long term, but short-term adaptation is painful
Matt Price, Director of Investigations at blockchain analytics firm Elliptic, believes a move toward standardized tax reporting will benefit the sector in the long run. A former IRS special agent focused on crypto cases and former head of investigations at Binance, Price noted the personal complexities of declaring crypto payments. “Figuring out how to declare these payments can be daunting; when I received part of my compensation in crypto, there was no 1099 form provided. I had to handle my own accounting,” he said.
With the introduction of 1099-DA forms, cryptocurrencies will be treated more like other financial assets for reporting purposes — mirroring the 1099-B system used by brokers for mainstream investments. The goal is to create more uniformity and clarity for taxpayers and regulators alike.
Price acknowledged that the high volume and complexity of digital asset transactions complicate cost basis calculation, a challenge shared with other asset classes. He also noted that many algorithmic traders in traditional markets encounter similar reporting hurdles, but expressed optimism that the crypto sector will gradually adapt and overcome these difficulties.