Crypto lobbyists are urging Congress to support the Tax Clarity for Mining and Staking Act, opposing an amendment that could complicate tax reporting.
The Blockchain Association, Crypto Council for Innovation, and The Digital Chamber have reached out to the U.S. House Committee on Ways and Means, advocating for the Tax Clarity for Mining and Staking Act (H.R. 9175). This bill aims to provide clearer tax guidelines for individuals involved in cryptocurrency mining and staking.
Introduced on June 8, H.R. 9175 is still under review and has not advanced in the legislative process. The bill proposes that new digital assets received from mining and staking activities be treated as ordinary income, allowing taxpayers to choose a special accounting regime similar to that for self-created property.
Concerns Over Phantom Income
Lobbyists have raised concerns regarding the potential for taxing income before it can be realized. The IRS currently requires miners to report the fair market value of mined Bitcoin as income upon receipt, which can lead to issues of "phantom income" if the asset's value decreases before it is sold. This situation could force taxpayers to pay taxes on gains they have not actually realized.
In their letter, the organizations opposed an amendment proposed by Congressman Steven Horsford, which would limit the deferral of taxes on mining and staking rewards to five years. They argue that this amendment fundamentally alters the bill and could force taxpayers to recognize gains or losses on assets they have not sold, creating unnecessary burdens.
Ji Hun Kim, CEO of the Crypto Council for Innovation, expressed that the amendment would effectively impose a forced sale on staking and mining rewards, complicating tax reporting for participants.
Banking Sector Pushback
The American Bankers Association has criticized H.R. 9175, claiming it would provide crypto yields with an unfair edge over traditional savings and investment options. They warn that this could divert funds from banks, negatively impacting small business lending and local communities.
The ABA argues that the proposed tax deferral is a form of favoritism toward digital assets, contrasting it with the immediate taxation of dividends and interest on bank deposits. They believe such measures could undermine the stability of the banking system.
As the debate continues, the Blockchain Association has also called for the expedited passage of the CLARITY Act, highlighting the urgency of establishing clear tax regulations for the evolving cryptocurrency market.
