A recent survey conducted by Coinbase and Cointracker reveals that over 50% of cryptocurrency investors struggle to grasp the essential principles of taxability related to their digital assets. The findings, documented in the 2026 Crypto Tax Readiness Report, indicate that only 49% of respondents recognize that cryptocurrencies are taxable whenever they are sold. Alarmingly, nearly a quarter mistakenly believe that transferring crypto between wallets constitutes a taxable event.
Despite a general intent among users to comply with tax regulations, the intricate web of cryptocurrency ownership significantly complicates the issue. On average, respondents reported using 2.5 different platforms or wallets, with 83% relying on self-custodial wallets. However, only 35% admitted to adjusting their cost basis, the measure used to determine capital gains by deducting the original purchase price from the selling price.
The survey, carried out among 3,000 U.S. crypto users in late 2025, highlights a troubling aspect of the new 1099-DA tax forms. Coinbase notes that the reporting issues are exacerbated by automatic overreporting, where routine actions, such as paying with stablecoins or typical Ethereum transaction fees, trigger taxable events with minimal revenue implications. Coinbase predicts that it will issue over four million 1099-DA forms to clients with profits under $600. Moreover, more than 60% of customers lack complete cost basis data, primarily due to the complexities involved in transferring digital assets across various platforms.
Coinbase asserts that this situation creates a compliance burden for the average American taxpayer, posing a significant hurdle to the broader adoption of cryptocurrency technologies envisioned in the GENIUS Act. The firm emphasizes that every small transaction is technically taxable, which complicates straightforward compliance.
Matt Price, director of investigations at blockchain analytics firm Elliptic, acknowledges the intricacies of cryptocurrency taxes but argues that the introduction of standardized reporting through 1099-DA forms will ultimately promote greater adoption. He emphasizes that this shift represents a move toward targeted enforcement, diverging from previous broad investigations.
Having previously navigated the complexities of crypto taxation as a former IRS special agent and head of investigations at Binance, Price understands the challenges inherent in reporting volatile assets. He explains the difficulties he faced when accounting for his crypto compensation without a standard 1099 form.
While Price acknowledges that calculating cost basis can be more challenging in the high-frequency trading environment of cryptocurrencies, he draws parallels with traditional investments. He believes that, much like retail traders on traditional platforms, the crypto industry holds the potential to adapt and find effective solutions to these tax reporting challenges.
