The U.S. House Ways and Means Committee held its first legislative hearing on digital asset taxation on June 9, 2026, debating seven discussion-draft bills that collectively represent the most significant proposed overhaul of crypto tax treatment since the IRS classified digital assets as propert...
"When tax rules are clear, people comply. When they're unclear, complexity grows, costs rise, and economic activity moves elsewhere." — Lawrence Zlatkin, Vice President of Tax, Coinbase
The U.S. House Ways and Means Committee held its first legislative hearing on digital asset taxation on June 9, 2026, debating seven discussion-draft bills that collectively represent the most significant proposed overhaul of crypto tax treatment since the IRS classified digital assets as property in 2014. The bills address staking and mining income timing, a $10 gas-fee de minimis exemption, extension of wash-sale rules to crypto, stablecoin cash-equivalent treatment, securities lending parity, mark-to-market accounting access, and a voluntary disclosure amnesty program.
An estimated 67 million Americans — roughly one in four — now hold cryptocurrency, according to data cited by Chairman Jason Smith (R-MO). Coinbase alone submits approximately 800 million transaction records to the IRS annually, with roughly half involving amounts under $100. The committee heard testimony from representatives of Fidelity Investments, Coinbase, Coin Center, and NYU Tax Law Center. Bipartisan agreement emerged on reducing paperwork burdens for small transactions. Sharp partisan division surfaced over whether deferring taxation on staking and mining rewards constitutes a "special tax advantage" for crypto or a necessary correction to an unworkable status quo.
The IRS first classified cryptocurrency as property in Notice 2014-21, requiring capital gains treatment on every disposition. A decade later, that framework remains largely unchanged despite the market expanding from under $10 billion to over $3.2 trillion in total capitalization.
The practical consequences are measurable. According to a 2023 letter from Senators Warren, Casey, and Blumenthal to the Treasury Department, at least $50 billion of the federal government's annual $696 billion gross tax gap is attributable to unreported digital asset transactions. Separately, a survey cited during the hearing found that over 50% of American crypto holders do not understand when their holdings become taxable.
Form 1099-DA, the IRS's new digital asset reporting form, took effect for 2025 transactions. During its first year, brokers operate under transitional penalty relief (Notice 2024-56), reporting gross proceeds only. Cost basis reporting begins for assets acquired on or after January 1, 2026. According to Thomson Reuters, half of all 1099-DA forms filed to date reported amounts under $10, underscoring the scale of the paperwork burden generated by micro-transactions on blockchain networks.
The committee circulated seven discussion drafts. Four have been publicly identified by name; three remain unnamed in public reporting. Below is a summary of the identified legislation and provisions:
H.R. 9178 — Less Tax Paperwork for Digital Asset Owners Act Establishes a $10 de minimis exemption for network transaction fees (gas fees), capped at 5,000 transactions per taxpayer per year. Also exempts gains and losses on regulated stablecoins from complex reporting requirements.
H.R. 9176 — Providing Analogous Rules for Digital Assets (PARITY) Act A bipartisan bill introduced May 19, 2026, by Representatives Max Miller (R-OH) and Steven Horsford (D-NV). Extends trading safe harbor provisions, securities lending rules under IRC Section 1058, and mark-to-market accounting elections to digital assets. Includes a $200 de minimis threshold for stablecoin gains, mirroring foreign currency exemptions. Establishes criteria for "regulated payment stablecoins" eligible for cash-equivalent treatment: must be issued under the GENIUS Act, pegged solely to the U.S. dollar, and must have maintained price within 1% of $1.00 for at least 95% of trading days in the prior 12 months.
Tax Clarity for Mining and Staking Act Proposes that staking and mining rewards be excluded from taxable income at the time of receipt, with taxation deferred until disposition. Under current rules (Revenue Ruling 2023-14), validators owe ordinary income tax upon receiving block rewards — even if the token's value subsequently drops before the taxpayer can sell. An amendment by Representative Horsford would cap this deferral at five years.
Digital Assets Voluntary Disclosure Program Act Creates a two-year amnesty window for taxpayers who self-report previously unreported digital asset income. Compliant participants would be shielded from criminal prosecution, though civil penalties would still apply.
The remaining three drafts, which have not been publicly named, reportedly address residency-based sourcing rules for validation rewards, charitable contribution appraisal requirements for digital assets, and additional securities tax integration provisions.
The House and Senate have proposed meaningfully different de minimis thresholds, creating a reconciliation challenge if legislation advances:
| Parameter | House (H.R. 9178) | Senate (Lummis Bill) | |---|---|---| | Exemption Amount | $10 per transaction | $300 per transaction | | Annual Cap | 5,000 transactions | $5,000 total | | Scope | Network fees (gas) only | Broader transaction relief |
The House's $10 threshold is narrowly targeted at gas fees — not at everyday spending. Purchasing goods with appreciated Bitcoin or ETH remains a taxable event under the House draft. The Senate's $300 threshold is broader but carries a lower annual cap in dollar terms ($5,000 vs. potentially $50,000 under the House version).
This distinction matters operationally. According to Coinbase's testimony, approximately 800 million transactions are reported to the IRS annually from its platform alone. Roughly half are under $100. The administrative cost of tracking, reporting, and auditing millions of sub-$10 gas fee transactions appears to exceed any plausible revenue generated.
Under Revenue Ruling 2023-14, staking rewards are classified as ordinary income at fair market value upon receipt. This creates a timing mismatch that the industry terms "phantom income": a validator receives tokens valued at $100, owes income tax on $100, but may hold tokens worth $50 by filing time.
The Tax Clarity for Mining and Staking Act would resolve this by deferring tax recognition to the point of sale. The PARITY Act includes a similar five-year deferral option.
According to data presented during the hearing, approximately 70% of staking infrastructure across the top 10 blockchain protocols now operates offshore. In 2025, 88% of centralized exchange trading volume occurred on non-U.S. platforms. Proponents argue the current tax treatment accelerates this migration.
NYU Tax Law Center Deputy Director Michael Kaercher offered a dissenting view, testifying that deferral "violates parity with traditional finance and the principle that income is taxed on receipt." Representative Lloyd Doggett (D-TX) characterized the mining and staking legislation as conferring "special tax advantages" not available to other asset classes.
Currently, IRS Section 1091 wash-sale rules apply to stocks and securities but not to cryptocurrency, which the IRS classifies as property. This allows crypto traders to sell at a loss, claim the deduction, and immediately repurchase the same asset — a strategy unavailable to equity investors, who must wait 30 days.
The House drafts would extend the 30-day wash-sale restriction to digital assets. According to CoinLedger, this change would eliminate one of the last structural tax advantages crypto traders hold over traditional securities investors. The closure aligns crypto with equities and options under a unified loss-harvesting regime.
The practical impact falls disproportionately on active traders and algorithmic strategies that rely on continuous loss-harvesting. For long-term holders, the change is largely immaterial.
Under current law, stablecoins are treated as property. Every use — paying for coffee, transferring between wallets, converting to fiat — can trigger a taxable event, even if the gain is fractions of a cent.
The PARITY Act proposes a $200 de minimis exemption for stablecoin transactions where the issuer meets GENIUS Act standards and the token has maintained a price within 1% of $1.00 for 95% of trading days in the prior year. H.R. 9178 would separately exempt stablecoin gains and losses from complex reporting.
This provision has implications for the GENIUS Act's regulatory framework. If stablecoins gain cash-equivalent tax treatment, the economic argument for using dollar-pegged tokens in daily commerce strengthens materially. According to the Crypto Council for Innovation, 73% of small business owners surveyed expect crypto to grow as a payment method. Stablecoin tax clarity could accelerate that adoption curve.
The hearing revealed a functional bipartisan consensus on paperwork reduction and residency-based sourcing. Both parties agreed that requiring full capital gains reporting on sub-$10 gas fees creates compliance costs disproportionate to revenue collected.
The divide centers on staking deferral. Democrats Doggett, Sánchez, and Chu argued the proposals create preferential treatment for crypto holders. Republicans and the bill's bipartisan sponsors (Miller and Horsford) framed the provisions as parity corrections rather than preferences.
The hearing was a discussion session only — no markup or vote occurred. According to Tom Shea, EY Americas Crypto and Digital Asset Tax Leader, the tax legislation does not depend on passage of the CLARITY Act (the broader market structure bill): "We don't necessarily need the CLARITY Act to move the tax bill forward."
Chairman Smith described the hearing as providing "the third leg of the stool" alongside market structure (CLARITY Act) and stablecoin regulation (GENIUS Act). Whether the three legs can be assembled into a single legislative framework — or must advance independently — remains the central political question for the remainder of the 119th Congress.
From an economic value distribution perspective, these bills would restructure how tax obligations flow through blockchain ecosystems. Several observations:
Fee-layer economics. The $10 gas-fee exemption directly affects the cost structure of on-chain activity. If network fees below $10 are exempt from reporting, the effective tax burden on Layer 1 and Layer 2 transaction processing drops, potentially increasing transaction volumes and, consequently, validator revenue.
Staking capital flows. Deferred taxation on staking rewards reduces the immediate cash drain validators face, allowing reinvestment of the full reward amount. The five-year cap prevents indefinite deferral but creates a window where staking returns compound more efficiently than in the current regime.
Stablecoin velocity. Cash-equivalent treatment reduces friction on stablecoin transactions, directly increasing the velocity of dollar-pegged tokens. Higher velocity translates to higher fee revenue for issuers and the protocols that facilitate stablecoin transfers.
Wash-sale rule effects. Extending wash-sale rules reduces the tax subsidy currently available to high-frequency crypto traders, potentially decreasing artificial trading volume that exists primarily for tax optimization rather than economic utility.
The seven discussion drafts represent the most comprehensive attempt to overhaul digital asset taxation since the IRS's original 2014 classification. The $50 billion estimated crypto tax gap, combined with 67 million American holders generating hundreds of millions of micro-transactions, creates a compliance and enforcement problem that existing rules cannot scale to address.
The bills' trajectory depends on whether the staking deferral provisions can survive Democratic opposition. The narrower provisions — de minimis gas-fee relief, stablecoin treatment, wash-sale extension — appear to have bipartisan support. Whether they advance as a package or are unbundled into individual votes will be determined in the coming months. No timeline for a markup has been announced.