Stablecoin Tax Reporting on Form 1099-DA

If you’ve spent time in crypto, you’ve probably heard some version of: “Stablecoins are always $1, so taxes should be simple.” In reality, stablecoin tax reporting can be surprisingly unintuitive, especially once you move beyond basic buying and holding. Even though stablecoins are designed to track currency like the U.S. dollar (e.g. USDC), the Internal Revenue Service (IRS) treats them as property – similar to other digital assets – and not cash. Below, we’ll walk through how the IRS views stablecoins, why cost basis matters, and which stablecoin transactions trigger broker reporting on Form 1099-DA.

A quick note before we start…

Coinbase doesn’t provide tax advice. This article represents our stance on IRS guidance received to date, which may continue to evolve and change. None of this should be considered as advice or an individualized recommendation, but it’s important to us that our customers have relevant information available to them. Please consult a tax professional regarding your own tax circumstances.

Stablecoins are designed to maintain a stable value, but the IRS treats these assets as property, not cash. That distinction matters because:

• Cost basis matters. Every stablecoin has a "cost basis" (i.e. what you paid to get it).

• Cost basis is not always $1. Fees, market fluctuations, or how you received the coin (e.g., if it de-pegged to $0.99) can change that math.

• Cost basis can be missing. If you transferred crypto from one platform to another, then the platform you transferred to will not have the original purchase price. 

  • Coinbase enables you to manually update the cost basis from your own books and records by going to Taxes. Alternatively, you can use a third-party service like CoinTracker to aggregate and reconcile cost basis across all of your transactions.

At a high level, the IRS considers certain stablecoin activities to be taxable. Here are examples of taxable stablecoin activities:

• Swapping other crypto into a stablecoin

  • Example: Swapping ETH into USDC. From a tax perspective, that’s treated as a sale of ETH for its fair market value at the time, triggering a gain or loss relative to your ETH cost basis.

• Spending stablecoins

  • Paying a merchant in USDC is treated as disposing of property in exchange for goods or services. This triggers a gain or loss if the value of that stablecoin differs from $1.00 relative to your basis at the time of the transaction.

• Earning income in stablecoins

  • Staking rewards, yield, referral bonuses, and other promotional programs paid out in stablecoins are typically treated as ordinary income at the time you receive them, valued in fiat terms.

• Swapping between stablecoins

  • Moving from one stablecoin to another (e.g., USDT → USDC) is treated as disposing of one crypto asset and acquiring another. Even if the value is $1.00 for both, the exchange is a reportable event.

Simply holding stablecoins – or transferring them between wallets you control – does not trigger a taxable event.

Starting in the 2025 tax year, the IRS introduced Form 1099-DA to standardize the reporting of gross proceeds from digital asset transactions by brokers. For qualifying stablecoin sales exceeding $10,000 annually, the IRS allows brokers to use aggregated reporting. This optional method lets brokers combine these transactions into a single reported figure.

Your stablecoin transactions will be included on Form 1099-DA if they meet all of the following conditions within a calendar year:

The asset sold must be a “Qualifying Stablecoin.” To be eligible, the stablecoin must meet three primary criteria:

• The digital asset must be designed to track a single convertible currency (e.g. U.S. dollar) on a 1:1 basis.

• The stablecoin must use a mechanism that ensures the value does not fluctuate from the tracked currency by more than 3% over any consecutive 10-day period.

• The asset must be generally accepted as a payment by persons other than the issuer.

The sales transaction must be a “Designated Sale.” The optional aggregate reporting method for brokers like Coinbase only applies to “Designated Sales” such as:

• The sale of a qualifying stablecoin for fiat currency (e.g., U.S. dollar).

• The exchange of one qualifying stablecoin for another qualifying stablecoin (e.g., USDT for USDC).

• Note: The swap of a stablecoin for a crypto asset that is not a qualifying stablecoin is not a designed sale (e.g., USDC for BTC).

Designated Sales of Qualifying Stablecoins must exceed $10,000 in the aggregate.

• Brokers like Coinbase are only required to report if a customer’s total designated sales of qualifying stablecoins exceed $10,000 for the year.

  • Brokers will report the aggregate gross proceeds and total units sold for each type of qualifying stablecoin.

• If the total designated sales of qualifying stablecoins are $10,000 or less for the year, then the broker is not required to include those sales on a Form 1099-DA.

Beyond this minimum, brokers have discretion regarding the level of transaction detail they provide to the IRS. At Coinbase, our policy is to report only what is strictly mandated. Transactions falling at or below the $10,000 threshold will not be reported to the IRS.

Regardless of whether you receive a Form 1099-DA, you are responsible for reporting any taxable gains or losses on your personal income tax return (Form 8949 and Schedule D). Income from stablecoins along with other crypto rewards will continue to be treated as “miscellaneous income” and reported on Form 1099-MISC.

Let's run through a few examples:

This guide provides general information only. You should speak with a tax advisor regarding your specific tax situation.

Disclaimer

This article was last updated in February 2026. Coinbase doesn't provide tax advice. Information here is provided to help customers understand their taxes, but should be reviewed before a customer uses it to file their taxes. To ensure this information works for you, please work with a professional.