The crypto industry versus the tax trap: lobbyists demand maintaining the deferral for miners and stakers
Three leading crypto organizations — the Blockchain Association, the Crypto Council for Innovation, and The Digital Chamber — have joined forces to defend a key bill for mining and staking. On June 21, they sent a joint letter to the U.S. House Committee on Ways and Means, demanding the adoption of H.R. 9175 (Tax Clarity for Mining and Staking Act) in its original version, without controversial amendments.
What is the essence of the bill?
H.R. 9175, introduced by Congressman Mike Carey on June 8, aims to bring clarity to the taxation of rewards for transaction validation — whether through mining, staking, or similar blockchain support mechanisms. The document confirms that the digital assets received constitute ordinary income but offers taxpayers a special accounting regime similar to rules for self-created property. This allows deferring tax obligations until the actual monetization of the asset.
"Phantom Income" — the Industry's Main Enemy
The key argument of the lobbyists is the risk of taxing so-called "phantom income." Currently, the IRS position requires including the fair market value of mined bitcoins or staking rewards in gross income on the date of receipt. The problem is that a network participant may receive tokens but not sell them. If the asset's price subsequently falls, the tax is calculated based on the higher value at the time of receipt, even though the taxpayer had no actual cash proceeds. This creates serious liquidity issues and can lead to losses.
The Horsford Amendment: A Five-Year Timer
Steven Horsford proposed limiting the tax deferral to five years. If a taxpayer chooses the special regime but does not sell the asset by the end of the fourth tax year after receipt, they would have to recognize a gain or loss under a deemed sale mechanism. For the industry, this is a fundamental change. Crypto Council for Innovation CEO Ji Hun Kim directly stated that the amendment would "break" H.R. 9175, turning it into a five-year forced timer for staking and mining rewards.
The lobbyists emphasize that the five-year limit would force taxpayers to track cost basis and calculate gains on a mandatory cycle, even if no sale occurred. This would create additional administrative burdens for market participants, consultants, and the IRS itself. Meanwhile, the Joint Committee on Taxation estimated the budget impact of the amendment at just $101 million over 2026–2036 — a negligible amount given the potential problems.
Banking Lobby Opposes
Interestingly, the American Bankers Association (ABA) also opposed H.R. 9175. In their view, the bill would give crypto yields an unfair tax advantage over bank deposits and dividends. The ABA fears this could encourage a shift of funds from traditional banking products into crypto assets, negatively impacting small business lending and local communities.
My comment as an analyst: The situation surrounding H.R. 9175 is a classic example of the struggle for tax certainty in a rapidly growing industry. The Horsford amendment, despite good intentions, indeed creates a risk of a "tax trap" for long-term stakers. The market needs a clear and predictable system, not a five-year timer that could forcibly lock in losses. The question is whether the crypto lobby can convince Congress and the banking lobby, which sees this as a threat to its business model.