With more Americans holding cryptocurrency and other digital assets, members of the House of Representatives are weighing how to create clear tax rules for this growing form of currency.
According to Chairman and Representative Jason Smith (R-MO), the House Ways and Means Committee has spent months discussing and drafting legislation that will offer clarity, parity and administration on how to tax digital assets.
“Other countries, like Singapore and Switzerland, have already implemented comprehensive tax regimes that offer clarity to digital asset owners,” Rep. Smith said. “Congress must act now and enact clear tax rules to ensure America remains the global leader in digital assets.”
But Rep. Lloyd Doggett (D-TX), along with other lawmakers, questioned who these laws would benefit—the crypto industry, or taxpayers?
Pointing to a Wall Street Journal article, he said one of the Trump family’s crypto ventures put at least $1.2 billion in cash into the Trump family's pockets in the last 16 months. He also noted that Eric Trump owns part of American Bitcoin, a Bitcoin mining company that hit a $13 billion valuation when it went public.
Mike Kaercher, deputy director of NYU’s Tax Law Center, said one bill could allow digital asset companies, including those linked to the Trump family, to delay paying taxes indefinitely. He said the package of bills does not address this concern.
“Tax reporting and collection can absolutely reduce the risks of tax evasion or illicit activities, and I think that there's more to be done here,” Kaercher said.
One bill also aims to ease the tax burdens on cryptocurrency mining and staking, by changing how rewards are taxed, which Rep. Doggett argued “does not even the playing field for crypto, but it gives it special tax advantages.”
“Under current law, mining and staking rewards are taxed as income when they are received and available to the taxpayer,” Kaercher said. “A recent Tax Court ruling affirmed that treatment.”
Kaercher said there is a way to enforce tax compliance without increasing tax burdens for those with crypto assets. He said this framework already exists in traditional finance, but it must be adapted for digital assets.
“You would need to think about whether they fit the decentralized finance framework, but I don't think it's fatal,” Kaercher said. “I think it's workable. You just need to figure it out in a slightly different way.”
