Coinbase is urging US lawmakers to modernize the country’s tax framework for digital assets, arguing that current rules create unnecessary burdens for consumers without delivering meaningful benefits to tax authorities.
During a June 9 hearing before the House Ways and Means Committee, Coinbase Vice President of Tax Lawrence Zlatkin asked Congress to eliminate the requirement for Americans to calculate capital gains every time they use stablecoins for payments or pay blockchain transaction fees.
His testimony came as lawmakers reviewed six separate bills aimed at updating the tax treatment of digital assets. The proposals address a range of issues, including the taxation of mining and staking rewards, charitable contributions involving cryptocurrency, and reporting obligations for brokers.
Coinbase Pushes for Practical Tax Reform
Ahead of the hearing, the House Ways and Means Committee said it intended to explore legislation that would provide greater clarity, fairness, and administrative efficiency for digital assets.
Representing Coinbase, Zlatkin argued that the current system forces consumers to track minor gains and losses on everyday crypto transactions, creating an excessive compliance burden.
He specifically called for federally regulated stablecoins pegged to the US dollar to be treated the same as cash for tax purposes. Since these assets are designed to maintain a one to one value with the dollar, requiring users to calculate gains and losses each time they spend them serves little practical purpose, he said.
According to Zlatkin, the administrative costs of tracking the cost basis of stablecoin transactions far outweigh any meaningful tax revenue generated from such reporting requirements.
He also expressed support for legislation introduced by Congressman Rudy Yakym that would exempt blockchain transaction fees of up to $10 from tax reporting requirements.
In addition, Coinbase urged lawmakers to establish a broader de minimis exemption for small cryptocurrency transactions.
Under the exchange’s proposal, consumers making low value purchases with Bitcoin or other cryptocurrencies would not have to determine taxable gains every time they use digital assets to buy goods and services.
The issue has previously drawn public attention. In March, Coinbase Chief Executive Officer Brian Armstrong faced allegations that he opposed a Bitcoin tax exemption. Armstrong dismissed those claims as “totally false” and stated that he had personally advocated for a de minimis rule for Bitcoin transactions.
New Approach Proposed for Mining and Staking Taxes
Coinbase also voiced support for a bill introduced by Congressman Mike Carey that would change how mining and staking rewards are taxed.
If enacted, the proposal would allow validators to defer taxes on block rewards until the assets are actually sold rather than taxing them at the moment they are received.
To illustrate the point, Zlatkin compared digital asset rewards to agricultural production.
“A farmer is never taxed when a bushel of wheat sprouts from the ground,” he explained. “They are taxed when they harvest that crop, bring it to market, and execute a sale.”
In Coinbase’s view, the same principle should apply to newly generated digital assets.
The Challenge of Wash Sale Rules
Zlatkin also addressed the complex issue of wash sale regulations.
Under existing securities laws, investors cannot claim a tax loss if they repurchase the same asset within 30 days of selling it. Coinbase has long maintained that similar standards should eventually apply to cryptocurrency transactions.
However, the company warned that implementing such rules presents unique challenges.
Unlike traditional financial markets, cryptocurrency trading occurs continuously across centralized exchanges, decentralized liquidity pools, and self custody wallets. There is currently no unified reporting system capable of tracking wash sale activity across these fragmented environments in real time.
According to Zlatkin, lawmakers should provide an implementation period of at least 18 to 24 months after any wash sale legislation is enacted. This transition period would give the industry sufficient time to develop the software infrastructure necessary to comply with the new requirements.
Without that preparation, he cautioned, immediate enforcement could result in widespread reporting mistakes and a significant increase in Internal Revenue Service audits.
A Call for Clearer Rules
Coinbase’s testimony reflects growing pressure on lawmakers to adapt tax regulations to the realities of digital assets.
The exchange argues that practical reforms such as treating stablecoins like cash, creating exemptions for small transactions, and modernizing reporting requirements would reduce unnecessary complexity while improving compliance.
As Congress considers a new generation of crypto tax legislation, the outcome could play a major role in shaping how millions of Americans use and report digital assets in the years ahead.#crypto#cryptonews https://coinsignals.net https://t.me/coinsignalpublic
