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House weighs crypto tax bills
U.S. House lawmakers on the Ways and Means Committee held a Tuesday hearing on a legislative package to overhaul the taxation of digital assets, examining a slate of crypto tax proposals and questioning details of several draft bills.
“Crypto tax bills a work-in-progress as U”
Committee Chairman Jason Smith said the legislation addresses key gaps in the Tax Code, including parity in tax treatment with comparable traditional financial asset transactions, clarity for tax situations unique to digital assets, and reduction in paperwork burdens for digital asset owners and brokers.
The hearing focused on how the bills would handle tax-filing burdens for crypto users and investors, including provisions aimed at reducing paperwork for small transactions with very minimal gains.
Richard Neal, the committee’s ranking Democrat, said, "There's healthy skepticism on both sides," while also describing the need to be careful about putting a thumb on the scale in the Tax Code.
The process would typically proceed through revisions and markup before the bills could be considered by the wider House of Representatives, with Smith indicating an intent for bipartisan progress.
Deferral sparks Democratic concerns
One aspect drawing significant concerns from committee Democrats was the potential for deferred taxation of mined digital assets being gamed by mining companies.
Mike Kaercher, deputy director of the Tax Law Center at NYU Law, said the bill provides "an election for stakers and miners to defer income paid in the form of newly minted coins until disposition," which he argued could create a new tax subsidy.
Kaercher said the approach "violates parity with traditional finance and the principle that income is taxed on receipt," and warned that taxpayers could permanently escape tax by earning rewards through certain business structures.
CoinTracker’s Shehan Chandrasekera said a provision about staking and mining income to be not taxed at the time of receiving could reduce administrative burden, but he also raised that the draft bill was talking about subjecting crypto to the wash sale rule.
Lawrence Zlatkin, vice president of tax at Coinbase Global, tied the stakes to execution, saying, "When rules are clear, predictable and simple to execute, economic capital flows freely".
What happens next for crypto
The hearing also highlighted how the proposed rules could interact with other tax concepts, including wash sale rules and how regulations might take months to years as the IRS deals with fewer people.
Kaercher said deferring tax on mining and staking rewards "could also undermine administrability," while also arguing that deferral would become a new tax subsidy that could encourage investment in digital assets relative to other types of investment.
Zlatkin warned that federal action is urgent as states begin to consider their own digital asset tax regimes, creating a risk of a fragmented patchwork of taxes, reporting requirements, and compliance obligations.
The @coindesk report said it was unclear whether there will be a viable window for major crypto tax legislation before the current session of Congress ends at the close of 2026, with the agenda already crowded including remaining work on the crypto Clarity Act.
Smith summarized the committee’s aim as addressing key gaps and reducing paperwork burdens, while the hearing’s skepticism suggested the bills may not be ready for prime time.
