Coinbase Asks Congress to Treat Stablecoins as Cash, Lower Crypto Taxes

Coinbase VP Urges Lawmakers to Simplify Crypto Tax Rules

Coinbase’s Vice President of Tax, Lawrence Zlatkin, urged lawmakers on June 9 to reconsider the requirement for Americans to calculate capital gains on every stablecoin transaction or blockchain fee. His testimony came before the House Ways and Means Committee during a hearing focused on six proposed bills designed to modernize the U.S. tax code for digital assets, addressing issues from mining and staking taxation to charitable donations and broker reporting.

Seeking Clarity and Parity for Digital Assets

The House Ways and Means Committee stated its intention to examine legislation aimed at bringing “clarity, parity, and administrability” to the digital asset landscape. Zlatkin, representing Coinbase, argued that current tax regulations compel consumers to meticulously track minor gains and losses on routine cryptocurrency transactions. He specifically advocated for federally regulated stablecoins pegged to the U.S. dollar to be treated equivalently for tax purposes, given their design to maintain a one-to-one value with the dollar. Zlatkin contended that forcing users to calculate cost basis for every stablecoin expenditure generates excessive paperwork without yielding significant tax revenue.

Proposals for De Minimis Exemptions and Fee Waivers

Furthermore, Zlatkin expressed support for a proposal by Congressman Rudy Yakym to waive tax reporting requirements for transaction fees, often referred to as gas fees, up to $10. He also called on Congress to establish a broader de minimis exemption for small cryptocurrency purchases. Under Coinbase’s proposed framework, individuals making low-value transactions with Bitcoin (BTC) or other non-stablecoin cryptocurrencies would be relieved of the obligation to calculate taxable gains for each purchase. This comes after Coinbase CEO Brian Armstrong faced accusations in March of lobbying against a BTC tax exemption, claims he vehemently denied, stating he had personally advocated for a Bitcoin de minimis rule.

Support for Mining and Staking Tax Deferral

Regarding mining and staking, Coinbase endorsed a bill introduced by Congressman Mike Carey. If enacted, this legislation would allow validators to defer taxes on block rewards until those assets are sold, rather than upon receipt. Zlatkin drew an analogy, stating, “A farmer is never taxed when a bushel of wheat sprouts from the ground; they are taxed when they harvest that crop, bring it to market, and execute a sale.”

Addressing Wash-Sale Rules and Implementation Challenges

Finally, Zlatkin reiterated Coinbase’s stance on wash-sale rules, which disallow investors from claiming a tax loss if they repurchase the same asset within 30 days of selling it. While Coinbase agrees these rules should apply to crypto, the company highlighted a significant practical hurdle: the 24/7 nature of crypto trading across diverse exchanges, liquidity pools, and self-custody wallets. Currently, there is no unified data infrastructure to effectively track wash-sale violations in real-time across this fragmented environment. Zlatkin emphasized the need for an implementation runway of at least 18 to 24 months before such rules take effect, allowing for the development of necessary software infrastructure. He warned that immediate compliance mandates would likely result in widespread reporting errors and an increase in IRS audits.