In brief
- A House hearing exposed divisions over six GOP crypto tax bills.
- Democrats questioned exempting staking and mining rewards from taxable income, arguing it could favor crypto over traditional investments.
- Industry leaders pushed for a broader tax exemption on everyday crypto payments.
A House hearing on six crypto tax bills revealed a lack of bipartisan consensus on the subject Tuesday, with industry leaders pushing to expand the legislation—and Democrats questioning whether the entire process should be slowed down significantly.
Unspoken at the proceedings, but playing a major role behind the scenes, is the likelihood that Democrats will retake the House in November’s midterm elections. Republicans in both chambers are racing to get crypto bills passed while their party still controls Congress and the White House. Democrats, meanwhile, are starting to coalesce around a message that passing crypto legislation is an important goal—but one that might not need to be accomplished right away.
“There is a sense of urgency, but there’s also a sense of, ‘are we acting too quick without knowing what we’re doing?’” Rep. John Larson (D-CT) said Tuesday, during the House Ways & Means Committee’s crypto tax hearing. “There’s far more questions than there seem to be answers.”
The committee’s top Democrat, Rep. Richard Neal (D-MA), told reporters Tuesday he doesn’t foresee members reaching a bipartisan deal on crypto tax policy until after the midterms, according to Punchbowl News.
“I’m aligned with that goal—eventually,” Neal said at Tuesday’s hearing, regarding his interest in passing a bipartisan crypto tax bill.
One major inter-party disagreement that flared up Tuesday centers on the tax treatment of crypto generated through staking and mining. One of the six GOP-written crypto tax bills would exempt such rewards from an individual’s reportable income. Currently, staking rewards and newly mined crypto must be reported as income when a user receives the tokens, regardless of whether those rewards are sold or exchanged for dollars.
Democrats—including pro-crypto members of the party—expressed concern Tuesday that allowing taxes on such rewards to be deferred could make crypto more attractive than traditional, taxable investments like corporate stocks and bonds, and thereby significantly reshape financial markets.
“It seems to be a real sticking point in all this, and it seems that maybe we’re at an impasse,” Rep. Mike Thompson (D-CA), said of tax policy regarding crypto staking and mining. Thompson previously voted to pass both the stablecoin-focused GENIUS Act and the more wide-ranging Clarity Act, which would formally legalize most crypto activity in the United States.
Meanwhile, crypto executives who testified at the hearing pressed House members to expand certain provisions in the legislation, including de minimis exemptions for crypto payments. As it stands, one of the bills would create a $10 de minimis tax exemption for crypto network transaction fees, also known as gas fees—and would also eliminate reporting requirements on stablecoin transactions, by deeming the dollar-pegged crypto tokens as effectively equivalent to dollars for tax purposes.
Lawrence Zlatkin, Coinbase’s vice president of tax, told the committee it should expand the de minimis exemption to include all digital assets.
“A consumer who uses Bitcoin to buy a pair of jeans still has to calculate and report a capital gain,” Zlatkin said. “That’s not good tax policy. Americans shouldn’t need an accountant to buy jeans.”
With the Clarity Act facing a ticking clock in the Senate as November’s midterms fast approach, crypto policy leaders had hoped a win on crypto taxes could prove to be a consolation prize, in the event a market structure bill fails to become law before the end of the year.
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