More than half of cryptocurrency investors do not understand the fundamental concept of taxation when it comes to their digital asset holdings, according to a survey by U.S.-listed cryptocurrency exchange Coinbase (COIN) and Cointracker, a cryptocurrency tax and portfolio tracking platform.
The 2026 Cryptocurrency Tax Readiness Report found that only 49% of respondents correctly understand that cryptocurrencies are taxable every time they are sold, while almost a quarter incorrectly believe that simple transfers trigger tax events.
Although the majority of users have good intentions when it comes to crypto tax compliance, the cross-platform reality of crypto ownership exacerbates the so-called cost basis problem, deducting the initial purchase price of an asset for reporting capital gains.
The survey found that users used an average of 2.5 platforms/wallets, with 83% using self-custodial wallets and only 35% reporting they had adjusted their cost base in the past. The survey, conducted in late 2025, polled 3,000 American crypto users.
According to Coinbase, confusion around cost basis in the new 1099-DA forms is compounded by a degree of over-reporting built into the new regime. This is because everyday activities such as stablecoin payments and Ethereum gas fees trigger taxable events, while generating little meaningful tax revenue.
Coinbase said it plans to issue more than four million 1099-DA forms to customers with proceeds less than $600 – in addition to the fact that more than 60% of its customers have incomplete cost master data due to the way digital assets move between wallets and platforms.
“Today that means every stablecoin payment, every small DeFi [decentralized finance] transaction, every gas fee is technically a taxable event,” Coinbase said. “The compliance burden this places on everyday Americans isn’t just inconvenient – it’s a direct threat to the adoption and innovation that the GENIUS Act was designed to unlock.”
Despite the challenges, moving to standardized crypto tax reporting will make adoption easier in the long term, said Matt Price, director of investigations at blockchain analytics firm Elliptic. Price, a former IRS special agent specializing in criminal investigations, sees this as a shift toward targeted enforcement rather than the broad, manual investigations of the past.
Also a former head of investigations at Binance, Price understands the complexities of paying taxes on cryptocurrencies, having been paid in part in crypto by Binance and having to account for a volatile asset in the form of a payment.
“How do you report it?” » Price said in an interview. “I didn’t even have a 1099 to report that, so I had to do all my own accounting to report taxes accurately and account for that information.”
As such, the arrival of 1099-DA forms signifies a welcome standardization that simply brought crypto in line with what other financial products have had for years and mirrors the 1099-B’s approach for brokerages.
“There are certainly nuances and it’s fair to say that the basis is more difficult to calculate given the high frequency of transactions,” Price said. “But there are also parallels with traditional investing; I don’t know how many retail traders are doing algorithmic trading on Schwab, for example, but it’s also a very similar type of trading. If they can figure it out, I think the industry can probably figure it out.”
