A package of several crypto tax bills may not be ready yet for prime time, as a hearing in the US House Ways and Means Committee revealed potentially important questions from lawmakers that suggested the panel had not achieved bipartisan embrace of the bills that would tailor a clearer tax code for gains in digital assets.
The latest draft laws are intended to address tax filing burdens from crypto users and investors, though House lawmakers — especially Democrats — raised sharp questions about the proposed tax treatments during a Tuesday hearing to discuss the bills, and some key members reportedly protested ahead of the session. This initial hearing is an initial step in a process that will typically continue through revisions and markups before the bills can be considered by the House of Representatives, and committee chairman Jason Smith indicated an intent for bipartisan progress.
“I’m aligned with that goal — eventually,” Richard Neal, the committee’s ranking Democrat, said at the hearing. “There is healthy skepticism on both sides.”
Although the Digital Asset Market Clarity Act slowly winding its way through the US Senate represents the crypto industry’s leading policy effort in Washington, a set of new crypto tax laws would be second on the priority list. As the US rules are, the taxes on digital asset gains are difficult to manage for investors – especially those who benefit from mining, betting or who make a large number of transactions.
“The committee legislation addresses important gaps in tax law, including parity in tax treatment with comparable traditional transactions involving financial assets, clarity on tax situations unique to digital assets, and reduction of paperwork for owners and brokers of digital assets,” the chairman, Smith, summarized in a statement before the hearing.
One of the bills would meet the long-standing industry request that small transactions with very minimal gains be exempt from tax reporting, which could ease accounting burdens on users and free up digital assets for use in routine payments. Another bill would eliminate the double-tax scenario for mining and profits, which are taxed upon receipt and when sold.
“If Americans want to pay with a stablecoin instead of a credit card or cash, they should be able to do so without a pile of tax paperwork,” Smith said at the hearing.
Mine suspensions
But one of the hearing’s witnesses, Mike Kaercher, deputy director of the Tax Law Center at NYU Law, said the bills still contain pitfalls, including his own objection to the mining-and-staking provision that could be abused.
“The problem is that the bill then gives an option for strikers and miners to defer income paid in the form of newly minted coins until disposal,” he said, suggesting it could create a new tax subsidy. He argued that it “contradicts parity with traditional finance and the principle that income is taxed on receipt.”
“Despite some well-thought-out guardrails in the bill, it may be possible for taxpayers to permanently escape tax by earning rewards through certain business structures,” he said.
This concept attracted considerable attention from the committee’s Democrats, concerned about 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 at the end of 2026. It’s late in that session and the agenda is already crowded, including with the remaining work on the Crypto Clarity Act.
“Regulatory clarity and fiscal clarity go hand in hand,” said Kevin Wysocki, Anchorage Digital’s chief policy officer, in a post on social media X. “If we want innovation, investment and jobs to stay in America, policymakers need rules that are clear, workable and built for modern technology.
For its part, the US Senate has not made significant progress on crypto tax bills, although Senator Cynthia Lummis has tried to move similar legislation through the upper chamber of Congress – so far without success. Both chambers must ultimately approve legislation before it can become law regulating US crypto activity.
A potential reduction in the burden on taxpayers in the newly unveiled bills will also be shared by the Internal Revenue Services, which has already been inundated with a new tax reporting scheme this year. The US Internal Revenue Service has cut a significant portion of its staff under President Donald Trump’s administration while also seeing a rapidly increasing influx of crypto applications.
“Millions of Americans own or use digital assets, but much of the tax code still treats this technology as if it were a niche experiment rather than a growing part of the financial system,” said Coinbase’s vice president of taxes, Lawrence Zlatkin. “The result has been confusion for taxpayers, compliance challenges for businesses and unnecessary burdens for the IRS.”
Read more: US House tax committee weighs crypto bills, including relief for small transactions
