Blockchain Association Advocates for Comprehensive Crypto Tax Reforms

Following a pivotal meeting with the House Ways and Means Committee on Capitol Hill, the Blockchain Association has put forth a series of proposed reforms aimed at modernizing the tax framework for cryptocurrencies.

“We are optimistic about the bipartisan potential to modernize the tax policies surrounding digital assets in 2026. We’re eager to maintain dialogue with lawmakers to establish clear and practical regulations that foster compliance and enhance the United States’ competitiveness,” the Blockchain Association stated in a recent post on X.

On the same day, the organization unveiled its Digital Asset Tax Principles, advocating for a “de minimis exemption” for small crypto transactions, coupled with a proposal to classify stablecoins as cash for tax purposes. This classification aims to alleviate the disproportionate tax reporting burden that frequent transactions can impose.

The Blockchain Association emphasized the importance of taxpayer privacy in reporting protocols while ensuring effective measures are in place to combat illicit activities. They further argued that developers and non-custodial platforms should not bear the same broker obligations.

Another critical aspect of the proposals addresses how staking rewards are taxed. The group advised that taxing these rewards “upon creation” can complicate liquidity and valuations. Instead, they suggest these rewards be classified as self-created property, only taxable when sold or disposed of.

Additional recommendations include extending wash sale rules to encompass digital assets and creating a statutory safe harbor for foreign individuals trading on U.S. exchanges.

Previous attempts to address these issues have encountered challenges. Notably, Senator Cynthia Lummis introduced a bill advocating for a de minimis exemption for crypto transactions under $300 and a $5,000 cap on total tax-free activities. This initiative also aimed to tackle the double taxation issues faced by digital asset holders during the staking and mining phases, where rewards are taxed upon receipt and subsequently upon sale.

However, the proposal was met with significant opposition from Democratic Senator Elizabeth Warren, who voiced concerns that it could enable crypto investors to evade income reporting on specific transactions, effectively creating a loophole within the existing tax code.

In summary, the Blockchain Association’s proposed reforms aim to streamline the tax landscape for cryptocurrency users, promoting compliance and clarity while protecting user privacy. As these discussions progress, the outcomes could significantly shape the future of digital asset taxation in the U.S.