Summary
- The administration’s desire to create a ‘golden age’ of crypto innovation has created momentum for regulatory and taxation changes at the federal level.
- Several significant pieces of legislation and a number of amendments to taxation policy have either passed or are currently being debated.
- Proponents argue that less regulation is required to allow the sector to flourish, while opponents cite ethics concerns, and disagreements about the nature of digital assets.
- For more information about the position of CCI and its members on some of these issues, visit our Comment Letters page.
What’s changed since the start of the second Trump administration?
During campaigning, President Donald Trump famously suggested he would become the U.S.’s first crypto president and pledged to make the US, the “crypto capital of the world.” In the first week of his second term in office, he signed Executive Order 14178 to promote U.S. leadership in the sector, since when, among other developments, three key pieces of legislation have been tabled, the promise given of a Strategic Bitcoin Reserve, and the creation of a White House Working Group with a remit to create a comprehensive regulatory and legislative framework governing crypto.
What are the key legislative changes?
Overall, the administration is pursuing a ‘golden age’ for crypto innovation. The GENIUS Act (signed into law in July 2025) doesn’t relate specifically to taxation issues, but its focus on stablecoins is relevant, offering a starting point for regulating payment stablecoin transactions.
The CLARITY Act (passed by the House in July 2025) seeks to delineate the jurisdiction over digital assets between the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC).
The PARITY Act, currently in draft form, proposes reforming how crypto is taxed in line with existing traditional asset rules. It seeks to apply the same tax and regulatory ideas that are used for securities and commodities to digital assets.
Also passed is the Anti-CDBC Surveillance State Act, which stops the Federal Reserve from issuing retail central bank digital currency to the public.
In July 2025, the White House Working Group on Digital Asset Markets issued a report recommending that tax burdens be reduced, particularly for stablecoins.
The same month, the president signed the Congressional Review Act (CRA) resolution repealing a regulation related to crypto taxation reporting on DeFi platforms, which the previous administration had implemented towards the end of its tenure.
In March 2026, the SEC submitted interpretive guidance to the White House – Commission Interpretation on Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets.
Few details have been released, but the guidance outlines how securities laws could be applied to crypto and reportedly focuses on creating a framework for categorizing crypto assets. This will help determine which fall under SEC jurisdiction, and which can therefore potentially be treated differently.
There are also a number of specific taxation areas that the administration is reviewing, the more prominent being:
The Working Group has suggested that the Corporate Alternative Minimum Tax (CAMT), which applies to unrealized gains and losses on digital assets, could inhibit growth in the sector. It has called on the Treasury and IRS to publish guidance about how unrealized gains are taken into account for determining the adjusted financial statement income (AFSI).
The Working Group has also called on both institutions to publish guidance to clarify whether an investment trust that stakes its digital assets is treated as a trust for the purposes of federal income tax. If the Working Group gets the outcome it’s seeking, investors will be able to minimize their reporting obligations for crypto investments and income that they earn through staking.
The Working Group has raised concerns about wrapping digital assets (converting a digital asset on one blockchain to a tokenized representation on another), seeking clarification as to whether this act constitutes a taxable event.
Stablecoins – to tax or not?
The question of whether or how to tax stablecoins is one of the hot topics of 2026. Following the passage of the GENIUS Act, which established a regulatory framework for stablecoins, the focus has naturally shifted towards how they should be treated in terms of taxation.
The Working Group has recommended legislation that classifies stablecoins as debt, viewing this as the best reflection of their structure and the risk of gain or loss on disposition.
There is also support for a ‘de Minimis’ exemption. This is aimed at exempting small stablecoin transactions (under $200) from capital gains using a ‘safe harbor’.
While this idea has secured bipartisan support, an issue that has created considerable tension between crypto supporters and banks is whether stablecoins that pay interest or ‘yields’ should be treated as bank deposits.
Banks have argued that if customers effectively see stablecoins as a bank account with higher rates of interest than traditional accounts, there will be a huge ‘deposit flight’ from traditional banks.
A Treasury study suggested that banks could lose up to $6.6 trillion in deposits in this scenario – a situation that could destabilize some banks, especially smaller ones. Banks argue that stablecoins aren’t subject to the same safety regulations as banks, making them a riskier option for customers.
For his part, the president has categorically sided with crypto companies, and in March 2026 wrote in a social media post: “The Genius Act is being threatened and undermined by the Banks, and that is unacceptable. They need to make a good deal with the Crypto Industry because that’s what’s in best interest of the American People.”
Crypto taxation at the federal level
The tax definition of a digital asset is: “any digital representation of value recorded on a cryptographically secured, distributed ledger (blockchain) or similar technology (Infrastructure Investment and Jobs Act).”
According to the IRS, digital assets are considered property rather than currency because it can be stored, bought, sold, owned, transferred or traded.
The IRS highlights the following as examples of digital assets:
- Convertible virtual currencies and cryptocurrencies such as Bitcoin
- Stablecoins
- Non fungible tokens (NFTs)
- How a digital asset is used
A digital asset that either has an equivalent value in real currency or acts as a substitute for real currency is called a ‘convertible virtual currency’. Cryptocurrency falls into this category. It can be used to:
- Pay for goods and services
- Be digitally traded
- Be exchanged for or converted into currencies or other digital assets
Profits from crypto are taxed at different rates depending on how they were acquired (income or capital gains) and the period over which it’s been owned.
Crypto is taxed when:
- Assets are sold for more than they were paid for. If a loss was incurred, this can be deducted from personal income tax.
- If crypto is converted from one currency to another (i.e. using Bitcoin to buy Tether) because this is regarded as a sale. Again, if a profit has been made, tax will need to be paid.
- Crypto is spent on goods and services, with tax owed on the transaction.
- An individual is paid in crypto by an employer, with taxation imposed at the relevant tax rate.
- An individual receives crypto in exchange for goods and services.
- Crypto is mined, with the amount of tax owed dependent on earnings based on the market value of the coins on the date of receipt.
- Staking rewards are earned. Much like mining, tax is based on the value of the rewards on the day they were received.
- Rewards earned. If by holding certain cryptocurrencies an individual earns rewards, these will be taxable.
- An airdrop is received. Airdrops (released often as part of giveaways or marketing campaigns) are regarded as taxable income.
- There is a hard fork (where a blockchain platform effectively splits in two, one version following existing protocols, the second a new version). These can be taxed but the situation depends on how the asset is used.
An individual can’t be taxed on: buying and holding onto crypto, donating crypto to a qualified charity/non-profit, crypto received as a gift, crypto transfers between the individual’s own wallets, and with some exemptions giving crypto gifts to a certain value; otherwise gift tax rates range from 18-40%.
Outlook
Since the start of President Trump’s second term, large-scale changes have been under way in the crypto sector, pointing to commensurate changes in the taxation of digital assets.
Legislation designed to regulate the digital asset sector is developing, but several important taxation issues related to digital assets and their usage remain unresolved.
Among the top priorities is the characterization of digital assets; whether they are a security or a commodity is a contentious and a long-running question.
An additional challenge for the administration’s plans is opposition to taxation changes from powerful quarters. Bipartisan players support and oppose the crypto sector. Politically, a strong example of this is the impassethat is developing over the GENIUS Act between banks and the president.
The CLARITY Act has also faced challenges. The Senate Banking and Agricultural Committees, with their respective jurisdiction over the SEC and CFTC, drafted their own market structure legislation during 2025 after the act passed through the House. Discussions stalled at the end of the year with Democrats raising a number of objections. These ranged from a call for additional ethics rules and safeguards to disagreements about how best to manage DeFi.
Notably, SEC chair, Paul Atkins, sees digital asset regulation as a priority. He’s been recorded as saying that he prefers to take the route of congressional legislation, but that the SEC will proceed independently if it has to, suggesting that further tensions and challenges should be anticipated.
N.B. This article offers an overview of federal legislative changes and developments related to digital asset taxation at the time of writing. It covers some taxation requirements, but isn’t designed to offer advice.
