Seven crypto tax bills target reporting, staking, exchanges

Lawmakers in both chambers filed seven bills proposing changes to how cryptocurrencies are taxed and reported. The measures were referred to tax-writing committees and include compliance timelines for brokers and platforms.

Proposals would broaden the definition of a “broker” to cover more custodians, exchanges and intermediaries and would require these entities to report cost basis, proceeds and gains to taxpayers and the IRS. Some bills would exempt small-dollar transfers or person-to-person transactions from reporting requirements.

Several bills address staking rewards, airdrops and protocol incentives. Under some proposals, rewards that increase an investor’s economic position would be taxed as ordinary income when received, with capital gain or loss calculated on later sale or transfer. The bills differ on the timing of recognition and on methods for valuing assets that lack active market prices. A subset of measures would give Treasury authority to issue valuation guidance.

Exchanges and custodial services would face added tracking and reporting duties. Proposed standards would require platforms to record customer cost basis, report proceeds from sales and, in certain cases, report transfers between wallets. Smaller exchanges and decentralized finance platforms have raised concerns about operational and legal challenges when no single entity exists to collect and transmit tax information.

Provisions aimed at businesses that accept crypto include options to treat crypto receipts as ordinary income at fair market value on receipt or to defer tax consequences under specified conditions. Some bills would authorize standardized reporting to customers to help determine tax basis, while others would require withholding on high-value crypto payments.

Other technical issues covered include possible application of wash sale rules to crypto, tax treatment of stablecoin redemptions and whether intermediated transfers should trigger information reporting. Certain bills seek alignment with existing securities and commodities tax frameworks; others propose rules specific to digital assets.

If enacted, the measures would affect individual investors who trade, stake or receive crypto as compensation; exchanges and wallet providers; miners and validators; payroll services handling crypto pay; merchants accepting crypto payments; and tax preparers and software vendors that provide reporting and valuation tools. The legislation follows earlier efforts to expand third-party reporting and addresses gaps in existing IRS guidance relative to market developments.