On October 1, 2025, the Senate Finance Committee held a hearing on cryptocurrency taxation (the “Hearing”), which followed a similar hearing held by the House Ways and Means Committee in July that we summarized here. Representatives from the cryptocurrency industry, including Coinbase and Coin Center, testified about various cryptocurrency tax issues and criticized perceived flaws in the current federal framework for taxing cryptocurrency. Democratic Senators Ron Wyden and Elizabeth Warren called for more stringent cryptocurrency tax rules and faulted the current cryptocurrency tax framework for contributing to perceived decreases in tax revenue. On the other side of the aisle, Republicans, including Senator Mike Crapo, criticized the current cryptocurrency tax framework as unclear and signaled that a Republican-drafted cryptocurrency tax bill was forthcoming, echoing a similar statement about draft legislation during the House committee’s earlier hearing. Despite their differences, Senators from both parties expressed support for further cryptocurrency tax legislation.

Key cryptocurrency tax issues discussed at the Hearing included:

• Curtailing (or possibly eliminating) the cryptocurrency reporting regime. As previously discussed here and here, reporting requirements introduced by the 2021 Infrastructure Investments and Jobs Act, together with finalized Treasury regulations, require extensive reporting for cryptocurrency transactions.
• Clarifying whether staking rewards are taxable. As previously discussed here, current IRS guidance requires taxpayers who stake their cryptocurrency to include the fair market value of staking rewards in their income upon receipt.
• Creating a de minimis exception for cryptocurrency transactions. As previously discussed here and here, recently proposed, but not enacted, legislation would exempt from tax a small amount of an individual’s gain or loss recognized on the disposition of cryptocurrency used to buy goods and services.
• Clarifying whether cryptocurrency dealers and traders can elect mark-to-market tax treatment. As previously discussed here, a recent legislative proposal would define commodity for purposes of the mark-to-market rules to include cryptocurrency assets, thereby allowing dealers and traders in commodities to elect to use the mark-to-market accounting method.
• Clarifying that cryptocurrency lending transactions are not taxable events (e., treating these transactions similarly to securities lending transactions).

In light of the current government shutdown, it is uncertain when cryptocurrency tax legislation will be promulgated. That said, with both House and Senate committees indicating that legislation is forthcoming, now is an opportune time for the cryptocurrency industry to get their comments in.