A survey conducted by Coinbase and Cointracker has revealed a significant knowledge gap among cryptocurrency investors regarding tax obligations. The 2026 Crypto Tax Readiness Report, which polled 3,000 U.S. crypto users in late 2025, found that only 49% correctly understand that crypto is taxable when sold. Conversely, almost a quarter (25%) mistakenly believe that simple transfers between wallets trigger taxable events.
The complexity of multi-platform ownership exacerbates the issue. The survey found users average 2.5 platforms or wallets, with 83% utilizing self-custodial wallets. This fragmentation leads to the "cost basis problem," where investors struggle to track the original purchase price of assets to accurately report capital gains. Only 35% of respondents reported having adjusted their cost basis in the past.
Coinbase highlighted that the confusion is intensified by the new 1099-DA reporting forms and a degree of "overreporting" built into the regime. The exchange pointed out that everyday activities like stablecoin payments and Ethereum gas fees are technically taxable events, yet generate minimal meaningful tax revenue. Coinbase expects to issue over four million 1099-DA forms to customers with under $600 in proceeds, and noted that over 60% of its customers have incomplete cost basis data due to assets moving across wallets and platforms.
"Today, that means every stablecoin payment, every small DeFi transaction, every gas fee is technically a taxable event," Coinbase stated. "The compliance burden this imposes on ordinary Americans isn't just inconvenient – it's a direct threat to the adoption and innovation the GENIUS Act was designed to unlock."
Despite the challenges, industry experts see long-term benefits. Matt Price, Director of Investigations at blockchain analytics firm Elliptic and a former IRS special agent, views the standardized reporting as a shift toward more targeted enforcement. Having also been a former head of investigations at Binance and paid partly in crypto, Price understands the personal complexity, noting he had to do his own accounting without a 1099 form. He believes the 1099-DA brings welcome standardization, aligning crypto with other financial products like the 1099-B for brokerages.
"There's certainly nuance and it’s a fair point that the basis is harder to calculate given the high frequency of trading," Price said. "But there are some parallels to that in traditional investments as well... If they can figure it out, I think the industry can probably figure it out."
