The Blockchain Association, a leading U.S. cryptocurrency trade group, is spearheading a major push to fundamentally rewrite Internal Revenue Service (IRS) tax rules for digital assets. The organization has released a detailed policy paper and is actively meeting with House lawmakers to shape legislation, arguing that current tax frameworks—designed for traditional property—are ill-suited for modern blockchain activity.
Under the existing IRS guidance, established in 2014, cryptocurrency is classified as property. This classification means nearly every transaction—including sales, trades, crypto-to-crypto swaps, and using crypto for payments—can trigger a taxable capital gains event. Furthermore, mining and staking rewards are treated as ordinary income upon receipt, creating complex compliance burdens as users must track cost basis and holding periods for each individual transaction.
The industry's proposals seek modernization, not elimination, of crypto taxes. Key recommendations include: deferring taxation on routine blockchain activity until assets are converted to fiat currency; creating clearer exemptions for protocol-level operations like staking and validation; simplifying cost-basis tracking for high-frequency on-chain transactions; and aligning tax treatment more closely with how digital assets function as payment rails.
A specific and contentious proposal calls for a de minimis tax exemption on "low-dollar" crypto transactions. The Blockchain Association argues that reporting "negligible gains or losses from routine transactions imposes disproportionate costs on individuals and overwhelms tax administration without meaningful revenue upside." The group also advocates for applying wash sale rules to digital assets, allowing investors to claim losses even if they repurchase the same crypto, and for treating stablecoins as cash for ordinary purchases.
The lobbying effort comes at a critical time as the IRS intensifies enforcement and expands reporting requirements for exchanges and brokers. The debate in Congress is already heated. Republican Senator Cynthia Lummis introduced a bill in July 2025 incorporating several industry-friendly provisions, including tax exemptions for some transactions. This bill has faced strong opposition from Democratic Senator Elizabeth Warren, who argued that the de minimis exception alone could cost the U.S. Treasury $5.8 billion and criticized a proposal to exempt reporting for crypto transactions under $300.
Industry advocates warn that without updated rules, the U.S. risks pushing innovation offshore or discouraging participation in blockchain networks. However, any substantive change would require legislative action or formal regulatory updates, as the IRS maintains its current framework is sufficient. The outcome hinges on regulatory appetite and congressional negotiation, not just industry pressure.
