New US tax reporting rules for cryptocurrencies have drawn sharp criticism from industry leaders, with a senior Coinbase executive saying the framework could place unnecessary pressure on retail investors.
Crypto brokers will start issuing Form 1099-DA as a new reporting requirement, which they must provide to their customers and the Internal Revenue Service (IRS) starting from the 2025 tax year.
The initiative seeks to enhance transparency for digital-asset transactions while establishing similar regulatory frameworks that govern traditional financial markets for cryptocurrency oversight.
In the first phase, the form will report only gross proceeds from transactions. It will not include cost-basis details such as the original purchase price. Investors must therefore calculate their own gains or losses while filing returns.
Lawrence Zlatkin, Vice President of Tax at Coinbase, said the rules could ‘do a disservice’ to everyday investors. He argued that users may need to report even small trades, stablecoin transfers, and blockchain network fees.
According to industry experts, the existing ownership structures of cryptocurrencies create regulatory compliance challenges for businesses. Investors frequently transfer their holdings among various exchanges, private wallets, and decentralized platforms. The dispersed activities make it hard to keep precise records which increases the chances of making errors during reporting.
Market participants also warn that incomplete data on early tax forms could lead some investors to overstate gains or face disputes with tax authorities.
US regulators say stronger reporting standards will help address under-reported crypto income and bring greater accountability to a fast-growing market. Officials expect brokers to begin providing full cost-basis reporting from 2027 as systems improve.
The debate shows a greater need for resolution because it represents a broader challenge. Authorities want tighter enforcement in digital-asset markets, while industry players seek simpler rules that match how blockchain transactions function.
The current crypto taxation system undergoes fundamental changes through the transition. Retail investors must keep precise records and obtain expert guidance to meet the requirements of the new regulatory system.