Coinbase urges Congress to treat stablecoins like cash and ease tax burden on cryptocurrencies

The exchange argued that tracking gains on stablecoin purchases creates administrative complexity without generating significant tax revenue.

Coinbase Vice President of Taxation Lawrence Zlatkin testified before the House Ways and Means Committee on June 9, asking lawmakers to stop requiring Americans to calculate capital gains every time they spend a stablecoin or pay blockchain transaction fees.

His testimony came during a hearing on six standalone bills aimed at updating how the U.S. tax code treats digital assets, covering everything from mining and staking taxes to charitable donations and broker-dealer reporting requirements.

Coinbase pushes for simpler crypto tax rules

Ahead of the hearing, the House Ways and Means Committee said it would consider legislation designed to bring “clarity, parity, and manageability” to digital assets. Representing Coinbase, Zlatkin told lawmakers that current tax rules force consumers to track tiny gains and losses on routine transactions involving crypto.

He said federally regulated stablecoins tied to the U.S. dollar should be treated at par for tax purposes because they are designed to maintain a one-to-one value with the greenback.

He also argued that requiring users to calculate cost basis every time they spend a stablecoin only creates red tape without generating significant tax revenue. Additionally, Zlatkin supported a proposal by Congressman Rudy Yakym to remove tax reporting on gasoline costs of up to $10.

He also called on Congress to create a broader de minimis exemption for small cryptocurrency purchases. Under Coinbase’s proposal, people making low-value transactions with Bitcoin (BTC) or other non-stable cryptocurrencies would not have to calculate taxable gains every time they buy something.

Recall that in March this year, Coinbase CEO Brian Armstrong was accused of lobbying against a BTC tax exemption. At the time, he called the claims “totally false” and said he had personally spent time advocating for a de minimis rule for Bitcoin.

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Regarding mining and staking, the exchange supported a bill from Congressman Mike Carey that, if passed, would allow validators to defer tax on block rewards until those assets are actually sold instead of received.

“A farmer is never taxed when a bushel of wheat sprouts from the ground; he is taxed when he harvests that crop, puts it on the market and makes a sale,” Zlatkin explained.

The question of washing and selling

Finally, the executive reiterated Coinbase’s view on wash sale rules, which prevent investors from claiming a tax loss if they repurchase the same asset within 30 days of its sale.

Although the company has long agreed that the rules should also apply to crypto, it pointed out a practical problem: crypto is traded 24 hours a day on exchanges, liquidity pools, and self-custody wallets, all at the same time, and there is currently no shared data architecture that would allow anyone to track wash sale violations in real time in this broken environment.

According to the tax guru, before the rules come into force after their promulgation, there should be an implementation period of at least 18 to 24 months to allow the necessary software infrastructure to be built. He warned that forcing immediate compliance would lead to widespread reporting errors and a flood of IRS audits.