Context and Chronology

A prominent crypto trade group delivered a coordinated set of tax positions to lawmakers and engaged House staff and regulators this month with the explicit aim of shaping draft tax language before committee votes. The organization published its principles in a public paper and followed up with meetings intended to influence a pending congressional tax bill; the document is available here. Lobbying teams pressed several interlocking changes that would alter reporting obligations, token classification, and loss-recognition rules, and they timed outreach alongside separate industry contacts in the executive branch on market-structure matters.

The group’s recommended package contains four headline changes: a small-transaction (de minimis) exemption proposed at $300 to reduce routine filing; an argument to treat stablecoins like cash when used in ordinary payments to simplify merchant bookkeeping; an extension of wash-sale mechanics to crypto to preserve loss claims when assets are repurchased; and a request to classify many mining and staking proceeds as capital-gains events rather than ordinary income for timing purposes.

Those proposals intersect with a broader policy push: parallel legislative work on market structure, stablecoin statutes and reporting reforms means tax drafting will not be considered in isolation. Procedurally, committee markups and intercommittee negotiations have become congested — lawmakers have paused or rescheduled votes while staffers trade clause-level language, and intercommittee friction (notably between Banking and Judiciary staff) has raised practical concerns about enforcement gaps and criminal-investigatory authorities.

Fiscal estimates quickly became a political flashpoint. Senator Elizabeth Warren and other opponents pointed to a roughly $5.8 billion revenue impact tied to the proposed de minimis carve-out, framing the exemption as an industry giveaway; by contrast, separate reporting reforms that include an IRS 1099-DA and more robust custodial disclosures are tied to a Joint Committee on Taxation modeling that projects roughly $28 billion in additional revenue over ten years from improved reporting. Those two numbers measure different policy levers (an exemption’s near-term revenue loss versus long-run gains from expanded reporting and compliance), a distinction that is central to reconciling partisan claims and negotiating compromises.

Operationally, the package would reallocate where the IRS collects information: it reduces small-transaction reports while concentrating reporting and broker-like obligations on custodial platforms, exchanges and qualified intermediaries. That shift dovetails with the administration’s broader push — including convenings of banks, exchanges and trade groups — to resolve clause-level questions about stablecoin mechanics and reward-like features that could otherwise raise deposit-replacement concerns for banks.

The IRS is already moving in related directions: the new 1099-DA form will in many cases report only sale proceeds, requiring taxpayers to supply missing cost-basis data or risk default zero-basis treatments that inflate gains. Large U.S. platforms are expected to issue these forms for the 2026 filing cycle, prompting tax preparers and reconciliation vendors to anticipate a marked increase in work. International reporting standards and improved on-chain analytics further amplify enforcement capacity and shorten the window for remediation.

Privacy and enforcement trade-offs are explicit in the trade group’s memo: it asks for taxpayer privacy guardrails while also urging robust illicit-finance enforcement. The practical effect of the proposals, however, is to concentrate surveillance and compliance vectors in a smaller number of institutional chokepoints — an outcome that creates enforcement efficiencies but also commercial advantages for large, well-capitalized custodians that already operate compliance stacks.

Market consequences are likely to be directional and measurable. Treating stablecoins as cash for payments would reduce frictions for merchant adoption and could accelerate retail token rails; de minimis relief would lower routine paperwork for small-dollar users. Conversely, tighter reporting and the 1099-DA’s evidentiary burdens will raise near-term compliance costs for retail holders and increase demand for reconciliation services and crypto-aware tax preparation.

Industry reactions are mixed and politically consequential: some lawmakers and firms (including supporters in the Senate) are receptive to carve-outs and industry drafting, while withdrawals or public withholding of endorsements by exchanges have complicated near-term consensus. White House-mediated technical convenings aim to bridge differences on stablecoin rewards and reporting mechanics, but negotiators face a narrow window to convert executive-level understandings into committee-ready clauses before markups and scorekeeping settle the fiscal picture.

In sum, the Blockchain Association’s submission is a targeted attempt not only to simplify tax compliance for small-dollar activity but also to reshape commercial incentives and the locus of regulatory power. Whether those aims prevail will depend on reconciling divergent fiscal estimates, aligning interagency and intercommittee priorities, and drafting anti-avoidance and privacy safeguards that mitigate concentration risks while delivering the promised compliance relief.