Coinbase accused of sabotaging Bitcoin's tax break to favor USDC profits
Coinbase is facing accusations of undermining Bitcoin's growth to boost its own stablecoin profits. Critics claim the company has lobbied against a key tax exemption for Bitcoin while pushing its USDC stablecoin. The dispute has drawn in industry figures, including Twitter co-founder Jack Dorsey, and sparked a public defence from Coinbase's top executives.
At the centre of the row is a proposed *de minimis* tax exemption, which many see as vital for Bitcoin's use in everyday payments. Coinbase, however, stands accused of telling US lawmakers that such an exemption is unnecessary—an allegation the company strongly denies.
The controversy erupted on X (formerly Twitter) after reports suggested Coinbase had dismissed the tax exemption as 'dead on arrival' in private discussions. High-profile voices, including Dorsey, quickly weighed in, accusing the exchange of prioritising its stablecoin business over Bitcoin's adoption. Coinbase CEO Brian Armstrong and Chief Policy Officer Faryar Shirzad hit back, labelling the claims 'misinformation' and a 'total lie'.
Armstrong later clarified that Coinbase *does* support the exemption, which would allow small Bitcoin transactions to avoid capital gains tax. Yet scepticism remains, given the company's financial ties to USDC. In 2025 alone, Coinbase earned an estimated **$1.35 billion** from stablecoin operations—a **48% jump** from the previous year. Most of this revenue comes from interest on US Treasuries backing USDC reserves. Analysts now predict Coinbase's stablecoin income could **grow sevenfold** if USDC becomes widely used for payments, particularly if the proposed **GENIUS Act** passes. This legislation aims to integrate digital dollars into mainstream finance, potentially giving USDC a major advantage. Critics argue that Coinbase's lobbying efforts—whether for or against Bitcoin's tax break—are ultimately shaped by its reliance on stablecoin profits.
The dispute highlights the tension between Bitcoin's original vision as peer-to-peer cash and the rise of corporate-backed stablecoins. Coinbase insists it supports both Bitcoin's tax exemption and USDC's expansion, but its financial incentives remain under scrutiny. With the GENIUS Act still in play, the outcome could reshape how digital currencies are used—and taxed—in everyday transactions.
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