Members of Congress have also been working on various versions of other legislation known as the Clarity Act and the Parity Act.
"That's going to make accountants' lives easier," said Shehan Chandrasekera, head of tax strategy at CoinTracker, a crypto tax software company, in a recent interview. "For example, there's a provision about staking and mining income to be not taxed at the time of receiving. From one of the drafts that I saw, that's going to reduce the administrative burden, but on the other hand, the draft bill is also talking about subjecting crypto to the wash sale rule. If that happens, that's going to increase the burden, because now we have to monitor whenever you're selling something in a 30 days before and after window and adjust the basis. It's hard to say how it's going to net out. There are provisions that are going to make accountants and taxpayers' life easier. There are other provisions that are going to make it a little bit complicated. We also have to see how the regulations are written. That's going to take months to years because pressure and the IRS is dealing with less people."
Crypto company representatives also testified. "When rules are clear, predictable and simple to execute, economic capital flows freely, technological innovation accelerates, and everyday taxpayers seamlessly comply," said Lawrence Zlatkin, vice president of tax at Coinbase Global. "Conversely, when tax rules are vague, patchworked, or administratively unworkable, economic activity stalls, errors multiply, businesses relocate permanently, and the government's own administrative burden grows alongside them."
He noted that some states are drafting their own laws on crypto taxes. "The need for federal action is becoming more and more urgent as states begin to consider their own digital asset tax regimes, creating the risk of a fragmented patchwork of taxes, reporting requirements, and compliance obligations that undermines the certainty Congress is working to establish," said Zlatkin. "Moreover, as evidenced this month by Illinois, some of these state proposals will impose new transaction taxes that will erode parity with other financial products and threaten the global leadership America is working to secure."
Some of the legislation could have unintended consequences. "The Clarity Act would allow consumers to earn deposit-like interest on stablecoin balances had held in accounts. If Clarity and deferral become law, consumers will get a better tax result by investing in stablecoin accounts than in high-yield savings accounts at a bank," said Mike Kaercher, deputy director of the Tax Law Center at NYU Law, during the hearing. "Deferral would become a new tax subsidy, encouraging investment in digital assets relative to other types of investment, risking deposit flight from banks into accounts that lack important FDIC insurance. Deferring tax on mining and staking rewards isn't just a distortive subsidy, it could also undermine administrability."
