A package of several crypto tax bills may not yet be ready for prime time, as a hearing by the U.S. House of Representatives’ Ways and Means Committee revealed potentially significant questions from lawmakers that suggest the panel has not achieved bipartisan buy-in for bills that would tailor a clearer tax code for digital asset gains.
The latest legislative plans aim to reduce the tax filing burden on cryptocurrency users and investors, although House lawmakers – particularly Democrats – raised pointed questions about the proposed tax treatments during a Tuesday hearing to discuss the bills, and some key members reportedly objected ahead of the session. This preliminary hearing is an opening step in a process that would typically go through revisions and markups before bills can be considered by the full House of Representatives, and committee Chairman Jason Smith has indicated his intention to make progress on both sides of the bill.
“I agree with that goal — ultimately,” Richard Neal, the committee’s top Democrat, said at the hearing. “There is a healthy skepticism on both sides.”
Although the Digital Asset Market Clarity Act, which is slowly passing through the US Senate, represents the crypto industry’s main policy effort in Washington, a set of new crypto tax laws would take second place on the priority list. Under the current state of U.S. rules, taxes on gains from digital assets are difficult to manage for investors, especially those who benefit from mining, staking, or who make a high number of transactions.
“The committee’s legislation addresses key gaps in the tax code, including parity of tax treatment with comparable traditional financial asset transactions, clarity of tax situations specific to digital assets, and reduction of red tape for owners and brokers of digital assets,” Chairman Smith summarized in a statement before the hearing.
One of the bills would address the industry’s long-standing demand that small transactions with very minimal gains be exempt from tax reporting, which could ease the accounting burden on users and free up digital assets for routine payments. Another bill would eliminate the double taxation scenario of mining and staking proceeds, which are taxed upon receipt and sale.
“If Americans want to pay with a stable currency instead of a credit card or cash, they should be able to do so without a stack of tax documents,” Smith said during the hearing.
Mining reports
But one of the hearing’s witnesses, Mike Kaercher, deputy director of NYU Law’s Tax Law Center, said the bills still contained pitfalls, including his own objection to the mining and staking provision that could give rise to abuse.
“The problem is that the bill then gives investors and miners the choice to defer income paid in the form of newly minted coins until they are available,” he said, suggesting this could create a new tax subsidy. He argued that this “violates parity with traditional finance and the principle that income is taxed upon receipt.”
“Despite some well-thought-out safeguards in the bill, it may be possible for taxpayers to permanently avoid tax by earning rewards through certain business structures,” he said.
This concept attracted the attention of Democrats on the committee, who were concerned about the abuse of such a postponement.
It is unclear whether there will be a viable window for major crypto tax legislation before the current session of Congress ends in late 2026. It is late in this session and the agenda is already packed, including with remaining work on the Crypto Clarity Act.
“Regulatory clarity and tax clarity go hand in hand,” said Kevin Wysocki, head of policy at Anchorage Digital, in an article on the social media site
For its part, the US Senate has not made significant progress on crypto tax bills, although Senator Cynthia Lummis has sought to push similar legislation through the upper house of Congress – so far without success. Both chambers would ultimately need to approve the legislation before it can become law governing crypto activity in the United States.
A potential reduction in taxpayer burden in the newly unveiled bills would also be shared by the Internal Revenue Services, which has already been inundated this year with a new tax reporting regime. The U.S. tax agency has cut a significant portion of its staff under President Donald Trump’s administration while receiving a growing influx of crypto filings.
“Millions of Americans own or use digital assets, but much of the tax code continues to treat this technology as if it is a niche experiment rather than a growing part of the financial system,” said Lawrence Zlatkin, vice president of tax at Coinbase. “The result has been confusion for taxpayers, compliance issues for businesses, and unnecessary burdens for the IRS.”
Read more: US House Tax Committee considers crypto bills, including relief for small transactions
