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New U.S. crypto tax reporting rules are creating unnecessary paperwork for millions of retail traders, according to Coinbase.
“Frankly, [small retail] transactional flow is so small, I just don’t know why we’re spending efforts as a country focused on them,” Coinbase Global (NASADAQ: COIN) Vice President of Tax Lawrence Zlatkin told CoinDesk in an interview. “I just think it just does a disservice to people when you’re trading 50 bucks, let’s say, that you get a form like this and you have to report gains or losses.”
The comments come as the IRS rolls out a new reporting framework for digital assets. The rules require custodial crypto brokers to send customers a new tax form, Form 1099-DA, reporting certain customer transactions.
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The rules require custodial crypto brokers to send customers a new tax form, Form 1099-DA, reporting certain transactions.
Millions of U.S. users are expected to receive the form for the 2025 tax year as regulators move to standardize crypto reporting across the industry, Coinbase said in a post last month.
Platforms like Public aim to make investing and managing small-scale crypto and stock portfolios easier for everyday users, helping people track their transactions and stay on top of reporting requirements without getting lost in the paperwork.
Stablecoins and blockchain transaction fees have also emerged as areas where the new reporting rules could create unnecessary complexity.
One example is USDC, a stablecoin designed to maintain a fixed value relative to the U.S. dollar. But because the IRS treats digital assets as property, some transactions must still be reported even when no gain or loss occurs.
“People should pay taxes where they have income,” Zlatkin told CoinDesk. “Do you have income on USDC? No, you don’t. So why are we reporting USDC transactions?”
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Small blockchain fees known as gas fees can also trigger reporting requirements despite their tiny dollar value.
“Gas fees might be 50 cents, a buck — do we have to disclose that?” Zlatkin said. “Is that a valuable use of resources to collect revenue? And I would posit that the answer is no.”
Another complication involves cost basis, the purchase price used to calculate gains or losses. For the 2025 tax year, Coinbase will report gross proceeds from crypto sales but not cost-basis data to the IRS. Users must calculate those figures themselves.
Coinbase Director of Tax Reporting Information Ian Unger told CoinDesk that the process can be complicated because crypto assets often move between exchanges and digital wallets.
“That’s not the world we live in today for crypto assets,” Unger said. “There could be a world where some of this does get easier…but we’re not there yet.”
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Coinbase said in the blog post last month it supports clearer tax guidance for digital assets but believes some aspects of the framework go too far. The company has called for a minimum transaction threshold that would reduce reporting requirements tied to very small transactions..
“For example, forcing taxpayers to report a $5 gas fee or a coffee purchase is an administrative burden that provides little benefit to the Treasury and stifles the utility of the digital economy,” the company said.
The debate highlights the challenge regulators face as they try to fit cryptocurrency into tax frameworks built for traditional financial markets.
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This article New U.S. Crypto Tax Reporting Rules ‘Do A Disservice To People,’ Coinbase Tax Executive Says originally appeared on Benzinga.com
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