Crypto Industry Pushes for Tax Rule Updates to Match Blockchain Reality

The crypto industry's proposals highlight growing tension between legacy tax frameworks and blockchain-based financial activity.

Under current IRS guidance, cryptocurrency is classified as property, not currency, which means that nearly every crypto transaction can trigger a taxable event. The existing system requires capital gains or losses to be applied when crypto is sold, traded, or used for payments, and treats mining and staking rewards as ordinary income at receipt.

Crypto advocacy groups argue that treating digital assets strictly as property creates compliance burdens that are out of step with how blockchains are actually used. Their proposals focus on modernizing tax treatment rather than eliminating taxes altogether, aiming to simplify cost-basis tracking for high-frequency and onchain transactions, and aligning tax treatment more closely with how digital assets function as payment rails and infrastructure.

The timing is notable, with IRS enforcement around crypto intensifying and Congress debating broader digital asset legislation. Industry groups argue that without updated tax rules, the US risks pushing innovation offshore or discouraging participation in blockchain networks altogether.