Coinbase criticizes new U.S. crypto tax reporting rules

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Coinbase criticizes IRS crypto rules

Form 1099-DA and changes to reporting rules

Under the new requirements, crypto brokers including Coinbase and Kraken must report information about their customers’ digital asset transactions to the tax authority. Form 1099-DA records the gross proceeds from digital asset sales and allows regulators to obtain more detailed data on transaction flows.

At the same time, the IRS has proposed changes to the way these forms are delivered. According to the draft rules, brokers will be able to send the forms electronically without being required to provide paper copies. “These proposed regulations would generally not require brokers to furnish the 1099-DA statements on paper to any customer that does not consent to receiving these statements electronically” the IRS proposal states.

Coinbase has already begun sending the forms to its U.S. customers. In the current tax year, the exchange will report only the gross proceeds from digital asset sales to the IRS. Users will have to calculate their actual profit or loss themselves.

Why Coinbase opposes some of the requirements

The company argues that the new system may be overly complicated for ordinary investors, particularly those making small trades. Coinbase Vice President of Tax Lawrence Zlatkin said the rules require reporting transactions that often have little tax significance.

“Frankly, [small retail] transactional flow is so small, I just don't know why we're spending efforts as a country focused on them,” Zlatkin said. According to him, reporting trades worth only tens of dollars may simply make filing tax returns more difficult for users.

Another point of concern is reporting gas fees — small blockchain transaction costs that can sometimes amount to less than one dollar. The rules also apply to transactions involving stablecoins such as USDC, whose value is designed to remain stable.

How the new rules could affect the market

Form 1099-DA is part of broader efforts by U.S. regulators to integrate cryptocurrencies into the existing financial system. Tax authorities believe standardized reporting could reduce errors and underreporting in tax filings.

At the same time, the crypto market remains complex from an accounting perspective. Investors frequently move assets between exchanges and wallets, swap tokens, and interact with decentralized services. In such cases, calculating the purchase price and actual profit can require additional tracking.

As a result, many crypto companies are developing automated tools to help users calculate their tax basis. Coinbase, for example, plans to introduce such features next tax year to simplify reporting for its customers.

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