Crypto news

On June 21, three leading crypto lobbying organizations — the Blockchain Association, the Crypto Council for Innovation, and The Digital Chamber — sent a joint letter to the U.S. House Committee on Ways and Means. Their goal: to secure the passage of H.R. 9175 (Tax Clarity for Mining and Staking Act) in its original form, without the controversial amendment proposed by Congressman Steven Horsford.

The bill, introduced by Congressman Mike Carey on June 8, aims to bring clarity to the taxation of mining and staking rewards. According to the document, received digital assets are recognized as ordinary income, but the taxpayer is given the option to choose a special regime similar to the accounting for self-created property. This allows for the deferral of tax payment until the actual sale of the asset.

The "Phantom Income" Problem

The key argument from the lobbyists is the risk of taxing income that a market participant has not yet monetized. The U.S. Internal Revenue Service (IRS) has already taken a firm stance: miners must include the fair market value of mined bitcoins in gross income on the date of receipt. The same rule applies to staking rewards.

This approach, according to the letter's authors, creates serious liquidity issues. A network participant receives tokens but does 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 is "phantom income," which can lead to tax liabilities without real cash inflow.

Horsford's Amendment: A Five-Year Timer

Steven Horsford proposed limiting the tax deferral to five years. If a taxpayer chooses the special regime and does not sell the asset by the end of the fourth tax year following the year of receipt, they would be required to recognize a gain or loss under a deemed sale mechanism — as if the asset were sold at fair market value on the last business day of that fourth year.

CEO of the Crypto Council for Innovation, Ji Hun Kim, called this amendment destructive to H.R. 9175. According to him, it turns the bill into a "five-year forced timer" for staking and mining rewards. The lobbyists emphasize that such a rule would force taxpayers to track cost basis and calculate profit on a mandatory cycle, even if no sale occurred — creating additional administrative burdens for market participants, consultants, and the IRS itself.

The Joint Committee on Taxation estimated the budgetary effect of the amendment to H.R. 9175 at just $101 million over 2026–2036. The lobbyists called this amount insignificant compared to the administrative costs and stressed that the original version of the bill is already a compromise.

Banking Lobby Against

The bill has also faced criticism from the American Bankers Association (ABA). Bankers argue that H.R. 9175 gives crypto yields an unfair tax advantage over traditional savings and investment methods. In their view, this could encourage a shift of funds from bank deposits to crypto products, negatively impacting lending to small businesses and local communities.

The ABA called the proposed regime "clear favoritism" toward digital assets, comparing it to the taxation of dividends and deposit interest, which are taxed in the current year.

My analysis: The battle over H.R. 9175 is a classic example of the clash between innovation and established financial interests. The banking lobby, fearing deposit outflows, uses the argument of "inequality," but in reality, it's about protecting their own business model. For the crypto industry, passing the bill without Horsford's amendment is a matter of survival: without tax clarity, miners and stakers risk facing insurmountable liabilities, especially in volatile market conditions. And $101 million in budgetary effect is a laughable price for the administrative chaos that a five-year limit would create.