"Cryptocurrency tax law isn't ready yet" The U.S. House of Representatives begins hearings on 7 draft bills, with Democrats questioning the abuse of delayed taxation on mining.

U.S. House Ways and Means Committee Holds Hearing on Crypto Tax Proposals

The U.S. House Ways and Means Committee held a hearing on Tuesday to review seven digital asset tax proposals, covering provisions such as small transaction tax exemptions, mining and staking tax deferrals, and more. However, Democratic members and experts warned that the mining deferral tax mechanism could be abused by miners, creating new tax loopholes, and that the bills are still far from bipartisan consensus.
(Background: Major overhaul of U.S. crypto tax law! House leaks "7 digital asset tax proposals," including mining, staking, and wash sales)
(Additional context: Cynthia Lummis proposes the "Digital Asset Taxation Act": $600 million revenue over ten years—what benefits does it bring to crypto?)

Table of Contents

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• Small Transaction Tax Exemption: Making stablecoin payments no longer hindered by tax paperwork
• Mining Deferral Controversy: Experts warn of "permanent tax evasion" loopholes
• End of Congressional Session in 2026: Crypto tax law window may narrow
• IRS layoffs amid reporting surge: Tax authorities overwhelmed

The U.S. House Ways and Means Committee held a crypto tax hearing on Tuesday to review the seven recent digital asset tax proposals. Chairman Jason Smith emphasized at the opening that these bills aim to fill key gaps in tax law concerning digital assets, including providing equal tax treatment for crypto transactions and traditional financial assets, clarifying tax scenarios unique to crypto, and reducing paperwork burdens for investors and brokers.

However, based on the Q&A during the hearing, these tax bills still have a long way to go before reaching bipartisan consensus. Democratic lead Richard Neal stated, "I support this goal ultimately, but it's not the right time. Both sides have reasonable doubts."

This hearing is only the first step in the legislative process; subsequent markup sessions are needed before the bills can be sent to the full chamber for a vote.

Small Transaction Tax Exemption: Making stablecoin payments no longer hindered by tax paperwork

Among the seven proposals, one of the most closely watched by industry is the exemption for small gains, allowing micro-transactions to be exempt from reporting. Under current law, even buying a cup of coffee with crypto requires detailed record-keeping and capital gains reporting, creating a heavy tax burden. Smith gave an example at the hearing: "If Americans want to pay with stablecoins instead of credit cards or cash, they should be able to do so without dealing with a bunch of tax paperwork."

Another key provision aims to address the double taxation issue for mining and staking rewards. Currently, miners and stakers pay taxes when they receive newly minted tokens and again when they sell. The proposal suggests taxing only at the point of sale.

Mining Deferral Controversy: Experts warn of "permanent tax evasion" loopholes

However, Mike Kaercher, Deputy Director of NYU Law School’s Tax Center, pointed out during the hearing that the deferral clause for mining and staking income poses significant concerns. He stated that the clause allows miners and stakers to defer taxes on income received in the form of newly minted tokens until they dispose of the assets, potentially creating new tax subsidies and violating the principle of tax equivalence in traditional finance and the fundamental tax law principle that income should be taxed upon receipt.

Kaercher further warned, "Although the bill sets up some seemingly comprehensive safeguards, taxpayers could still use specific business structures to permanently avoid this tax." Democratic members expressed high concern over this issue.

End of 2026 Congressional Session: Crypto tax law window may narrow

It’s worth noting that this session of Congress will end in late 2026. The agenda is already quite crowded, with the primary legislative goal for the crypto industry, the Digital Asset Market Clarity Act, still moving slowly in the Senate. Industry insiders believe that until the Clarity Act’s remaining work is completed, there may not be enough time for thorough debate on crypto tax legislation.

Senator Cynthia Lummis has previously pushed similar tax bills in the Senate but has yet to see substantial progress. Ultimately, any crypto tax law must be approved by both the House and Senate before becoming law binding across the U.S. crypto industry.

IRS layoffs amid reporting surge: Tax authorities overwhelmed

While the crypto tax proposals aim to ease the burden on taxpayers, the IRS is itself under immense pressure. This year, the IRS launched a new reporting system, leading to a rapid increase in crypto tax filings, but at the same time, large-scale layoffs under the Trump administration have left the agency’s review capacity strained.

Lawrence Zlatkin, Coinbase’s Vice President of Tax, stated in testimony, "Millions of Americans own or use digital assets, yet the tax law still treats this technology as a fringe experiment. The result is confusion among taxpayers, compliance difficulties for businesses, and an overwhelmed IRS—a three-way loss."

Kevin Wysocki, Policy Director at Anchorage Digital, also called on X (formerly Twitter), saying, "Regulatory clarity and tax clarity go hand in hand. If we want to keep innovation, investment, and jobs in the U.S., policymakers need clear, feasible rules designed for modern technology."

This article is sourced from CoinDesk and translated and compiled by Dongqu Dongqu.