Lloyd Doggett’s Crypto Tax Amendment Blocked Despite Warnings of DeFi Tax Loopholes

Although Republicans blocked his amendment to the Digital Asset Tax Certainty Act, Representative Lloyd Doggett (D-TX) is continuing to push for provisions that establish clearer tax rules for digital assets.

Rep. Doggett’s amendment would require decentralized finance (DeFi) platforms to report customers’ crypto transactions to the IRS, similar to other brokers. The Texas lawmaker argued the bill was missing protections against tax evasion and other illicit activity.

“When crypto is not being used for financial speculation, it is being used to facilitate illicit transactions,” Rep. Doggett said. “And there's nothing in this bill before us designed to stop or even mitigate the billions of dollars that are flowing in lawlessness that crypto makes possible.”

Although it won't solve all cryptocurrency abuse, Rep. Doggett said his amendment is a good first step in the right direction.

“My amendment will not end all of this abuse, but it can stop tax evasion and discourage other illicit activity,” he said.

Rep. Doggett argued that the repeal could cost the federal government billions in lost tax revenue. Citing the Joint Committee on Taxation, he said the reporting gap could result in roughly $4 billion in lost revenue.

“This prevents crypto from being used for tax evasion,” Rep. Doggett said, adding his amendment would also bring more transparency to the crypto industry.

Rep. Doggett said that the bill needs to close any loopholes that allow decentralized finance platforms to avoid broker reporting requirements. These platforms should be required to report transactions to the IRS, just as other brokers do, he said.

“They'll get to escape that duty entirely, and that loophole is an engine for tax evasion,” Rep. Doggett said.

Citing the Binance case from 2023 in which founder Changpeng Zhao pleaded guilty to violating U.S. anti-money-laundering requirements, Rep. Doggett said crypto can easily be used in sanctions evasion and illicit transactions without proper guardrails.

Binance agreed to a roughly $4.3 billion resolution with U.S. authorities, and Trump later pardoned Zhao, which Rep. Doggett said he was not surprised to see.

“Trump is the patron saint of wealthy tax chiefs,” he said. “The kind who would have honest, hardworking Americans shoulder an ever greater burden of our national defense, our transportation infrastructure, and other vital services.”