The U.S. House Ways and Means Committee has advanced the Digital Asset Tax Certainty Act with a 38-5 vote in Wednesday's markup hearing, marking significant bipartisan support for crypto tax legislation. This development comes one day after the crypto industry's market structure bill collapsed in the Senate, highlighting the divergent paths of crypto legislation in Congress. Committee Chairman Jason Smith called the vote a historic moment, stating "after more than a year of working together, Republican and Democrat Members have come together to establish the first-ever tax framework for digital assets." The tax committee's action represents a massive bipartisan show of support for the bill, which would provide crypto users with long-awaited answers on de minimis transactions and small, routine payments that currently trigger difficult tax accounting requirements. As reported by CoinDesk, the legislation would eliminate taxes on de minimis network or transaction fees, meaning any fees below $10, though users completing more than 5,000 transfers over the prior year would be excluded from the exemption.
The crypto tax bill introduces a $10 de minimis exemption for qualifying blockchain network and transaction fees, addressing small blockchain costs that currently create tax reporting requirements. Committee Chairman Jason Smith noted that without this threshold, buying a cup of coffee "triggers an absurd maze of compliance." The exemption would not be available to users who completed more than 5,000 transfers during the previous year, keeping the carve-out away from accounts with particularly high transaction activity. Under the proposed exemption, network fees below $10 would not be treated as taxable income or included in the basis calculation for blockchain transactions. The exemption applies specifically to fees paid to process transactions on a blockchain network, commonly referred to as gas fees or miner fees. For taxpayers making frequent small-dollar transfers, the administrative cost of tracking these fees often exceeded the tax liability itself. This provision builds on earlier Republican proposals and bipartisan legislation from Reps. Steven Horsford, D-Nev., and Max Miller, R-Ohio, covering small crypto transactions, gain and loss calculations, transfers, wash sales, mining, staking and broker requirements. The bill also establishes simpler accounting for widely traded digital assets and clearer tax treatment for stablecoins and crypto lending.
The legislation would close a significant tax treatment gap by extending wash-sale and constructive sale rules to digital assets, addressing a current loophole that allows crypto investors to sell a digital asset at a loss, buy it back immediately and still use the realized loss for tax purposes. According to Bloomberg Government, provisions drawn from H.R. 9172, the Applying Existing Tax Anti-Abuse Rules to Digital Assets Act, would extend these rules to digital assets, with qualified U.S. dollar stablecoins excluded from the new provisions. Currently, crypto investors can sell an asset at a loss and immediately repurchase it to reset their cost basis for tax purposes, a strategy commonly used to reduce taxable gains. The extension would close this loophole, aligning digital assets with the treatment of stocks and bonds. The wash-sale provision has been estimated to raise $1.71 billion over fiscal years 2026 through 2036. This extension aligns with current securities rules that prevent investors from claiming losses when substantially identical securities are repurchased within the required period. Many of the provisions in the bill address tokenized assets, while another section tries to clarify how ownership might be treated for digital asset disposition purposes.
Tax timing for newly created mining and staking rewards has emerged as the largest point of disagreement in the legislation, with the Joint Committee on Taxation Chief of Staff Thomas Barthold telling lawmakers that the bill does not decide when income from validating crypto transactions must be recognized. The bill says income earned from validating crypto transactions will be treated as ordinary income, but the timing remains unsettled. This matters because a crypto holder may receive rewards from cryptos when not selling or converting them into dollars later on. The Tax Clarity for Mining and Staking Act (H.R. 9175) proposed allowing miners and stakers to defer income recognition on newly created tokens until the assets are sold, which was estimated to reduce federal revenue by $2.956 billion between fiscal 2026 and 2036. Three crypto industry groups - The Blockchain Association, Crypto Council for Innovation and The Digital Chamber - opposed a five-year cap on the proposed treatment and asked lawmakers to pass H.R. 9175 without changes, while banking groups argued deferring tax on mining and staking income could give crypto rewards different treatment from interest and dividends.
Despite the bipartisan support, the bill has faced criticism from some lawmakers linking the crypto industry to President Trump. Representative Lloyd Doggett, a Texas Democrat and senior committee member, questioned why the crypto industry should receive attention while other taxpayer needs don't, stating "This committee remains the only place in Congress that's rushing to provide favors to this industry." Doggett noted the Senate's failure to advance the Digital Asset Market Clarity Act and criticized the committee for prioritizing crypto interests over ordinary Americans. None of Doggett's amendments passed when put to vote, including provisions that would have prevented senior officials from benefiting from crypto, restored previous reporting requirements concerning disclosure on decentralized platforms, and ordered a study of crypto mining relating to energy impact. The legislation's movement comes at a late stage in the congressional session, leaving it little time for further action unless it can draw attention during the brief period of roughly five weeks of congressional work scheduled between the November elections and the start of the next session in January. However, establishing some legislative momentum now may help smooth the way for future efforts with similar aims. The House of Representatives is set to break later this week until after the November election, giving it limited time to debate and vote on the tax bill, though any progress could set up continuation of work in 2027 when the new Congress is sworn in.
