Coinbase to IRS: Stop Treating Every Gas Fee Like a Lambo Purchase

Coinbase is cranking the lobbying dial to eleven, informing lawmakers that the U.S. tax code is a relic from the floppy disk era and is actively strangling crypto in its crib. Chief Product Officer Faryar Shirzad argues the existing rules were crafted for "20th-century money," while digital assets operate in a completely different financial galaxy—one the IRS apparently thinks is still powered by dial-up.

Thanks to the IRS classifying crypto as property, every microscopic transaction—whether it's a gas fee or buying a coffee with a stablecoin—triggers a taxable event. This forces users into the accounting hellscape of calculating cost basis and tracking gains on amounts so small they'd struggle to buy a fraction of a meme coin, turning every degen into an unwilling tax accountant.

The bureaucratic carnage is quantifiable: Coinbase has seen a 34% surge in tax-related support tickets compared to last year. The incoming avalanche of Form 1099-DAs for the 2025 tax season is creating a paperwork singularity. A huge chunk of these forms are for proceeds under $600, with hundreds of thousands tracking activity below a single dollar, effectively drowning any useful signal in a tsunami of regulatory noise.

The nightmare of cost-basis tracking is another front in this war. The exchange estimates over 63% of its users have holes in their transaction history, mostly because crypto has a habit of bouncing between wallets and CEXs like a hyperactive pinball. The result? Users either overpay the taxman or sacrifice their sanity manually piecing together transactions with tools about as helpful as a paper wallet.

Shirzad's proposed fix is a de-minimis exemption for trivial trades—a concept that already exists in other parts of the tax code—which would spare everyone from reporting payments so insignificant they couldn't cover a failed network transaction.

While the GENIUS Act has provided some clarity for stablecoins, the Internal Revenue Code itself remains as updated for crypto as a MySpace page. With the total crypto market cap dancing around $2.4 trillion and Bitcoin recently getting rejected at the $70k level, Coinbase warns this archaic tax regime could exile both users and innovation to friendlier shores, undermining U.S. ambitions to lead the very sector it's busy over-regulating.

On-chain data from Dune reveals Euro-pegged stablecoins have mooned, exploding from a supply of $203 million held by 13k wallets in January 2023 to $912 million across over 1 million holders by February 2026. Circle's $EURC is the current leader with $500 million, but there's a whole euro-stablecoin squad of 13 tokens (EURS, EURe, $EURI, $EURCV, etc.) in the mix. These euro tokens now command over 80% of the non-USD stablecoin supply in Europe. The overall stablecoin market has ballooned to $319 billion, with Tether's USDT maintaining its alpha status with a dominance of over $184 billion.

Beyond policy wrangling, Coinbase is doing its best TradFi impression, partnering with Better Home & Finance to allow homebuyers to use Bitcoin and USDC as collateral for down payments. Despite this seemingly bullish news, COIN stock dipped more than 4% in the last trading session and is down roughly 45% over the past six months, currently changing hands at $173.38—a chart that would make any holder's portfolio feel rugged.