A recent report has found that the majority of cryptocurrency holders are aware transactions are taxable and want to comply, but struggle with actually doing so.
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Recent data from a joint report by cryptocurrency exchange Coinbase and cryptocurrency tax platform Cointracker found that, despite its reputation as a means for tax avoidance and evasion, 74% of crypto investors are aware it is taxable versus 10% who believe it is not, and furthermore 65% have either reported their crypto activity on their taxes before while 15% have not needed to because they have not yet done any taxable crypto activity (they are likely buy-and-hold investors.)
At the same time, while a slight majority are confident in their knowledge of crypto tax rules, 56%, this confidence does not necessarily translate into 2025 tax reporting: 61% were unaware of the specific tax rules in effect this year for crypto transactions. Further, there also seems to be confusion over what does and does not constitute taxable activity: only 49% correctly understands that a tax event is triggered every time crypto is sold. Instead, 41% think the act of transferring cryptocurrency to a bank triggers the taxable event.
Cost basis calculations seem especially devilish for crypto investors. The report noted that exchanges cannot access the asset’s original purchase price from the exchange it was transferred from, as exchanges do not share customer transaction information with each other. Consequently, the cost basis information provided on Form 1099-DA from exchanges will be
incomplete for the transferred asset. Crypto users will have to reconcile the transaction data and report this separately to the IRS. If the cost basis is not provided to the IRS, the IRS could assume the original cost basis was $0, which results in overstated gains.
While 76% say they’re aware that there may have to be required cost basis adjustments, only 35% report having actually done so.
“The story this data tells is one of confusion. Users are struggling to navigate the complexities of crypto taxation, which is why it’s so important for us to help bridge that knowledge gap. Our goal is to help our users reconcile unknown cost basis data, understand their requirements, and file accurately with confidence,” said Lawrence Zlatkin, vice president of tax at Coinbase.
The report also looked at how crypto investors actually pay their taxes. The poll found that 78% use general tax software and 52% use professional accountants. In contrast, only a small fraction of the market – just 8% of crypto users – currently use crypto-specific tax reconciliation solutions, despite the heightened complexity of this year’s crypto tax preparation.
