House panel approves first federal crypto tax framework, one day after Senate's Clarity Act stumbles

The House Ways and Means Committee voted to advance cryptocurrency tax legislation, sending it to the House as progress stalls in the Senate on a bill to broadly regulate digital assets. 

On Wednesday, the House Ways and Means Committee voted 38-5 to advance the Digital Asset Tax Certainty Act — a bill that would establish clear federal tax rules for cryptocurrencies. 

"This is a historic moment for this Committee: after more than a year of working together, Republican and Democrat Members have come together to establish the first-ever tax framework for digital assets," said the committee's Chair Jason Smith, R-Mo. 

The bill sets out a threshold for taxes so people would not have to pay taxes on network or transaction fees in crypto if the fee is $10 or less. That does not apply to service providers doing transactions on behalf of others. That part of the bill, if passed, will not go into effect until December 2027. 

The legislation would also require the Treasury Department to establish a Digital Asset Voluntary Disclosure Program within 12 months of enactment. Taxpayers who qualify could amend earlier returns and settle the tax, interest, and any penalties owed.

The bill, which had a version released earlier this week, also delineates that income from mining and staking would be taxed as ordinary income, but makes room for certain investment trusts to stake their holdings without that activity alone affecting their tax status. An earlier version of the bill included an option to defer income, but that had since been removed, so the current version doesn't clarify when that income is recognized. 

"This bill is not as comprehensive as I would have liked, but I continue to believe that Congress needs to address when mining and staking rewards are recognized as income," said Rep. Steven Horsford, D-Nev., who had worked on the bill. "This package establishes ordinary income treatment, but leaves that timing question unresolved." 

As for the next steps, the House will be leaving Washington until after the November elections. 

"Given the House is expected to go on recess, this will likely be taken up during the lame duck period," said Alison Mangiero, chief strategy officer and head of U.S. policy at the Crypto Council for Innovation. "Following today, attention will turn to the Senate Finance Committee, which has also expressed interest in advancing digital asset tax legislation."

Mangiero also pointed to more work to be done on the bill.

"There is an opportunity to refine several important provisions, including the timing of income recognition for staking and mining rewards, broader de minimis relief for everyday digital asset transactions, and other technical issues that will further ensure that the final framework is clear, administrable, and durable," Mangiero said. 

The House committee's vote comes less than a day after the Senate tried to push forward sweeping cryptocurrency legislation called the Clarity Act and failed in its first procedural vote. Democrats said they voted against the bill largely because of ethics concerns that they believe were not fully addressed in the Clarity Act, given that President Donald Trump's crypto interests have grown to hundreds of millions of dollars. 

Trump's crypto interests resurfaced during Wednesday's House vote. 

"This bill still bestows billions in tax breaks for the crypto industry, benefiting billionaire crypto whales and some of the richest Americans like the Trump family," said Rep. Lloyd Doggett, D-Texas.