Blockchain Association Calls on US Congress to Overhaul Crypto Tax Rules

The Blockchain Association has called on the United States Congress to revise cryptocurrency tax provisions to establish more transparent reporting and equitable tax treatment for cryptocurrencies.

In the letter, representing over 100 members, the association demanded bipartisan bills for stablecoins, staking, mining, and cryptocurrency transactions. The group said 67 million Americans hold or use digital assets, but existing tax rules create unnecessary compliance burdens.

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Blockchain Association Wants Modifications to Crypto Tax Reporting.

The Blockchain Association presented its principles for digital asset taxation, including exempting smaller crypto transactions and treating stablecoins like cash. It urged that such changes should involve a lightening of the burden of Form 1099-DA reporting.

The group called on Congress to restrict broker reporting to those who hold or control customer assets. This would leave out of any tax solution non-custodial software developers and blockchain infrastructure providers but would not take away the tax enforcement obligations.

The proposals are linked to government proposals to reform cryptocurrency taxation, such as the House Ways and Means Committee’s crypto tax legislation. In September, the committee discussed modifications to the reporting requirements and the handling of cryptocurrency transactions.

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Crypto Group Calls for Staking and Mining Tax Reforms

The association called on the lawmakers to recognize cryptocurrency mining and staking rewards as self-generated property and tax them at the time of disposal. It claimed that the rewards should be sourced from the taxpayer’s location, not the validator’s location.

The group demanded transfers to be tax-free between wallets of the same owner, including blockchain bridges. According to its plan, smart contract transactions would not generate taxes if economic ownership and market exposure do not change.

The association advocated for the Wash Sale rules being applied to cryptocurrencies, while lawmakers did not impose restrictions on transactions that aren’t called “wash sales. It is the proposals that coincide with a push from crypto industry associations to overturn Illinois‘ 0.2% tax on digital asset transactions.

Congress Urged to Protect Crypto Investment and Development

The Blockchain Association urged Congress to establish a statutory safe harbor for foreign investors trading digital assets on US exchanges. It said similar protections already exist for certain securities and commodities transactions involving foreign persons.

The group proposed allowing cryptocurrency staking within grantor trusts, partnerships, and regulated investment vehicles while protecting access to retirement accounts. It also requested optional mark-to-market accounting for digital assets with readily available market prices.

For charitable donations, the association proposed removing costly appraisal requirements for regularly traded cryptocurrencies while recognizing blockchain development under research tax credits.

Congress has already considered digital asset tax proposals in both chambers, including the Senate’s ADAPT Act introduced in September. The association maintained that bipartisan legislation should provide workable compliance rules while supporting cryptocurrency businesses operating in the United States.