A set of proposed cryptocurrency tax reforms may not yet be ready for serious consideration, as a recent hearing before the U.S. House Ways and Means Committee exposed substantial concerns from lawmakers—suggesting the panel has not yet reached bipartisan consensus on the legislation aimed at creating a more transparent tax framework for digital asset profits.
The newly drafted proposals are designed to ease the tax-reporting challenges faced by crypto users and investors. However, during a Tuesday hearing focused on these bills, House members—particularly Democrats—posed sharp questions about the suggested tax approaches, and several key members reportedly voiced objections even before the session began. This initial hearing marks the first stage of a process that would normally involve revisions and formal markup before the bills could advance to a full House vote. Committee Chairman Jason Smith expressed a desire for bipartisan advancement.
“I share that objective—in time,” stated Richard Neal, the committee’s leading Democrat, during the hearing. “There is reasonable doubt on both sides.”
While the Digital Asset Market Clarity Act—currently progressing slowly through the U.S. Senate—remains the crypto industry’s primary legislative focus in Washington, a new set of crypto tax regulations would be the second-highest priority. Under current U.S. rules, taxes on digital asset gains are cumbersome for investors to handle—especially those involved in mining, staking, or frequent trading.
“The committee’s legislation tackles major shortcomings in the tax code, including ensuring tax treatment is on par with similar traditional financial transactions, providing clarity for tax scenarios specific to digital assets, and reducing paperwork requirements for digital asset holders and brokers,” Chairman Smith summarized in a pre-hearing statement.
One bill would respond to a long-standing industry demand: exempting small transactions with negligible gains from tax reporting, which would simplify accounting for users and make digital assets more practical for everyday purchases. Another bill would end the double taxation of mining and staking rewards, which are currently taxed both when received and when sold.
“If Americans wish to pay with a stablecoin rather than a credit card or cash, they should be able to do so without a mountain of tax paperwork,” Smith remarked during the hearing.
Mining deferrals
However, one of the hearing’s expert witnesses, Mike Kaercher, deputy director of the Tax Law Center at NYU Law, cautioned that the bills still contain flaws, including his specific concern that the mining-and-staking provision could be exploited.
“The issue is that the bill then allows stakers and miners to choose to defer income received as newly created coins until they are sold,” he explained, warning it could effectively become a new tax subsidy. He contended that it “breaks parity with traditional finance and the principle that income should be taxed when received.”
“Even though the bill includes some careful safeguards, it might still allow taxpayers to completely avoid taxes by earning rewards through certain business arrangements,” he added.
This idea drew considerable scrutiny from the committee’s Democrats, who were worried about potential misuse of such deferral options.
It remains uncertain whether there will be a feasible opportunity for major crypto tax legislation before the current congressional session concludes at the end of 2026. Time is running short, and the legislative calendar is already packed, including with ongoing work on the crypto Clarity Act.
“Regulatory clarity and tax clarity are inseparable,” said Kevin Wysocki, head of policy at Anchorage Digital, in a post on social media platform X. “If we want innovation, investment, and jobs to remain in America, policymakers need rules that are clear, practical, and designed for modern technology.”
Meanwhile, the U.S. Senate has not made notable progress on crypto tax bills, although Senator Cynthia Lummis has attempted to advance similar legislation through the upper chamber—so far without success. Both chambers would ultimately need to pass the legislation before it could become law governing U.S. crypto activities.
A potential easing of the burden on taxpayers in the newly introduced bills would also benefit the Internal Revenue Service, which has already been overwhelmed this year by a new tax-reporting system. The U.S. tax agency has significantly reduced its workforce under the Trump administration while simultaneously facing a rapidly growing volume of crypto-related filings.
“Millions of Americans own or use digital assets, yet much of the tax code still treats this technology as if it were a niche experiment rather than an expanding part of the financial system,” said Lawrence Zlatkin, Coinbase’s vice president of tax. “The outcome has been confusion for taxpayers, compliance difficulties for businesses, and unnecessary strain on the IRS.”
Read More: U.S. House tax committee weighs crypto bills, including relief for small transactions
