Coinbase urges US to reform crypto tax rules as 1099 reporting explodes
Coinbase’s chief product officer Faryar Shirzad says US crypto tax rules are outdated and treating digital assets as “property” makes routine activity taxable. Coinbase is pushing lawmakers to reform crypto tax rules and reduce user compliance burdens.
The exchange points to growing friction for traders and retail users. Coinbase reports a 34% jump in tax-related customer queries. It also warns that US broker reporting will create paperwork overload: millions of Form 1099-DAs are expected for the 2025 tax year, including many tied to very small transactions (many under $600, and some below $1). Coinbase argues this data volume is not improving clarity and may bury meaningful information.
Shirzad highlights additional structural problems: users must track cost basis, calculate gains/losses, and report—even for items like gas fees and stablecoin transfers—while crypto’s fast movement across wallets and exchanges can create reporting gaps that brokers cannot fully fix. Coinbase estimates 63% of users have cost-basis record gaps, leading to overpayment or manual reconciliation. It suggests a de minimis exemption for small transactions, similar to other parts of the tax code.
Separately, the article cites Dune data showing euro-pegged stablecoins accelerating after MiCA clarity: euro stablecoin supply rose from about $203M (Jan 2023) to ~$912M (Feb 2026), while holders grew from ~13K to 1M+. The piece also notes USDC and EURC as major players, with Tether’s USDT dominating the broader stablecoin market.
For traders, the key takeaway is policy risk: if crypto tax rules remain complex, trading and on-platform activity could face slower adoption and more user churn. If reform advances, it could improve retail usability and liquidity over time.
Neutral
Coinbase is lobbying for changes to crypto tax rules, highlighting user-level compliance pain (a 34% rise in tax queries, expected millions of 1099-DAs, and widespread cost-basis gaps). In the short term, this kind of policy spotlight can create uncertainty and prompt traders to reduce small, high-frequency activity—especially taxable micro-transactions—because reporting complexity can increase friction.
However, the news is not a direct rule change or enforcement action; it’s an advocacy push. That makes the immediate market effect more likely to be limited and sentiment-driven rather than fundamentals-changing. Historically, when regulators signal potential reform (or propose simplifications) after industry pushback, markets often wait for concrete outcomes rather than reacting aggressively.
Longer term, if Congress adopts de minimis-style relief or clearer broker/reporting standards, it could improve retail usability and reduce compliance-induced churn—typically a mild positive for liquidity and adoption. If reforms stall, the status quo may continue to pressure retail participation and could shift activity offshore. Net: neutral, with a bias toward improved sentiment only after legislative milestones.