Crypto Industry Urges Congress to Pass Tax Bill—But Will It Happen This Year?

The crypto industry is urging Congress to approve a new digital asset tax bill—and claim that changing the legislation at all could risk derailing its chances of passage.

In a letter sent this week to the top-ranking Republicans and Democrats on the House Ways and Means Committee, the heads of three top industry trade groups—the Blockchain Association, the Crypto Council for Innovation, and the Digital Chamber—pressed lawmakers to quickly pass a bill that would change how rewards generated by crypto mining and staking are taxed.

The legislation, debated at a Ways and Means committee hearing earlier this month, would exempt assets derived via crypto mining and staking from a holder’s reportable income. Currently, newly mined crypto and staking rewards held by U.S. taxpayers are treated as income, regardless of whether they are sold off. 

The bill, dubbed the Tax Clarity for Mining and Staking Act, was one of six crypto tax bills discussed at this month’s hearing. But it was by far the most contentious, attracting plenty of scrutiny from House Democrats. They warned the proposed law could make crypto more attractive than traditional, taxable investments like stocks and bonds—and thereby substantially reshape financial markets.

The committee’s top Democrats said, at the time, that they don’t foresee passing any crypto tax bills until after November’s midterm elections. Democrats are overwhelmingly favored to retake the House—a development that would grant them far greater control over the shape of crypto legislation.

In this week’s letter, crypto trade groups attempted to frame the current draft of the staking and mining bill as a compromise that must be pushed forward at all costs.

“Reopening the compromise already struck in this legislation would risk reviving the very problems the bill resolves and stalling a bipartisan result that is finally within reach,” the groups said.

It remains unclear, however, whether House Democrats view the current legislation as satisfactorily bipartisan. A representative for the Digital Chamber told Decrypt the organization plans to bring nearly a dozen member companies to the Hill on Wednesday to press for the tax bill’s passage.

When asked whether the group is confident that the bill can pass before the midterms—given mounting Democratic opposition—the representative said this week’s flyout should provide “a good feel for the level of motivation.”

“We recognize the calendar and political dynamics, but that only reinforces the need to keep pushing,” Lindsay Fraser, the Blockchain Association’s Chief Policy Officer, told Decrypt. “We believe this bill can still pass this Congress,” she continued, “and regardless of timing, the work happening now strengthens the foundation for durable, bipartisan action.”

That same ticking clock is currently impacting the Senate’s closely watched Clarity Act, which would formally legalize most crypto activity in the United States by reshaping America’s securities laws. The bill’s advocates have argued that if it cannot pass by August, it is unlikely to become law for the foreseeable future.

Editor’s note: This story was updated after publication to include comments from Blockchain Association Chief Policy Officer Lindsay Fraser.