Trump 2.0 Cryptocurrency Tax Priorities

Substantive Tax Reforms

The most significant proposal addresses the Corporate Alternative Minimum Tax (CAMT), reinstated by the Inflation Reduction Act of 2022. The plan calls for guidance excluding financial accounting unrealized gains and losses on cryptocurrency from Adjusted Financial Statement Income, arguing that CAMT creates punitive effects on the digital asset sector. Notice 2025-27 indicates anticipated interim guidance. This prevents tax rules from creating adverse effects on corporations and individuals who hold digital assets, whether in cold storage or on exchanges.

The framework seeks clarity on technical questions: whether trusts holding staked digital assets can maintain investment trust status; tax treatment of wrapping and unwrapping transactions (common in DeFi); and comprehensive updates to IRS FAQs not revised since 2014. Additional issues include mining and staking income timing, NFT characterization, and loss treatment.

Legislative Priorities

The primary recommendation treats digital assets as a new asset class subject to modified versions of tax rules applicable to securities or commodities. This would expand key Code provisions to actively traded fungible digital assets, including mark-to-market elections (Section 475), trading safe harbors (Section 864(b)), securities loans (Section 1058), and wash sale rules (Section 1091). The plan also recommends clarifying payment stablecoin treatment, potentially as debt instruments or functional currency.

Protecting Self-Custody and Decentralized Finance

The administration's most significant action came in April 2025 with H.J. Res. 25, which overturned Biden Administration efforts to define DeFi developers as "brokers" for tax purposes—even though these developers and their software never held custody of users' digital assets. This resolution protects individuals' ability to use decentralized protocols and self-custody wallets without being forced into traditional custodial relationships. The framework explicitly avoids imposing new reporting obligations on DeFi transactions, recognizing that such requirements would effectively mandate third-party custody and undermine blockchain innovation.

Taxpayer Reporting Simplification

Recognizing administrative burdens from tracking frequent small rewards, the plan proposes de minimis rules for staking, airdrops, and hard forks, removing compliance burdens that make self-custody impractical. The plan recommends reviewing guidance on mining and staking income timing, with possible legislation deferring inclusion until sale. The framework proposes requiring foreign digital asset account reporting under Section 6038D and streamlining duplicative Form 8938 and FBAR requirements.

International Coordination and Third-Party Reporting

The plan implements the Crypto-Asset Reporting Framework (CARF), adopted by over 65 jurisdictions as of May 2025, with regulations minimizing broker burdens and explicitly avoiding new DeFi reporting obligations. The plan modernizes broker reporting through streamlined electronic consent procedures for Form 1099-DA delivery and regulations implementing basis reporting when digital assets transfer between centralized exchanges.

Policy Philosophy

The framework emphasizes Executive Order 14219's directive to remove regulations impeding private enterprise and individual freedom. The plan applauds H.J. Res. 25 as an example of the pro-innovation approach to tax law. The theme is promoting digital asset growth while maintaining tax compliance, balancing innovation with enforcement needs. The approach prioritizes clarity, administrative efficiency, and international coordination while preserving individuals' ability to maintain direct ownership and control of their digital assets through cold storage and self-custody solutions.

Outline of Trump Administration Cryptocurrency Tax Proposals

I. Background and Context

• Executive Order 14219: Directs agencies to identify and remove regulations that impede private enterprise and entrepreneurship
• H.J. Res. 25 (April 2025): Overturned Biden Administration effort to define DeFi developers as "brokers" for tax purposes
• Current Framework: Digital assets treated as property (not currency) for federal income tax purposes per Notice 2014-21

II. Substantive Tax Issues - Priority Guidance

A. Corporate Alternative Minimum Tax (CAMT)

• Issue: CAMT (reinstated by Biden's Inflation Reduction Act of 2022) creates punitive effects on digital asset sector
• Problem: Includes financial accounting unrealized gains/losses on cryptocurrency in AFSI calculation
• Proposal: Guidance that AFSI does not include financial accounting unrealized gains/losses on cryptocurrency or investments generally
• Status: Notice 2025-27 issued stating Treasury/IRS anticipate interim guidance

B. Staking – Grantor Trust Classification

• Issue: Whether trusts holding digital assets that stake those assets can qualify as investment trusts treated as grantor trusts
• Proposal: Guidance addressing whether staking digital assets causes a trust to fail investment trust status

C. Wrapping Transactions

• Issue: Whether wrapping and unwrapping digital assets are taxable transactions
• Proposal: Guidance addressing tax treatment of wrapping/unwrapping transactions

D. IRS FAQs Update

• Issue: FAQs from 2014 forward have not been comprehensively revised
• Proposal: Update IRS FAQs on digital assets to reflect published guidance and regulations

E. Other Issues for Future Guidance

• Mining and Staking (timing of income, trade or business status, source of income)
• Valuation of digital assets traded on multiple exchanges
• NFTs (collectibles treatment)
• Losses on digital assets (worthlessness, abandonment, theft)
• Charitable deductions (removing qualified appraisal requirement for donations over $5,000)
• Tokenization of assets
• Investment company rules (Sections 351 and 721)
• Partnership liquidation rules
• Hot asset rules
• Regulated investment companies holding digital assets
• Subpart F, GILTI, and PFIC rules
• Blockchain splits and mergers
• Retirement account rules
• Offshore foundation repatriation

III. Priority Legislative Recommendations

A. Characterization as Securities or Commodities

• Issue: Code doesn't clearly define whether digital assets are securities or commodities for tax purposes
• Proposal: Legislation treating digital assets as a new class of assets subject to modified versions of tax rules applicable to securities or commodities
• Specific Provisions to Expand:
  • Section 475 (mark-to-market election)
  • Section 864(b) (trading safe harbors)
  • Section 1058 (securities loans)
  • Section 7704 (publicly traded partnership rules)
  • Sections 1091 (wash sale rules) and 1259 (constructive sales)

B. Stablecoins

• Issue: Tax characterization of stablecoins under current law is uncertain
• Context: GENIUS Act (July 18, 2025) regulates payment stablecoins
• Proposal: Legislation clarifying tax treatment of payment stablecoins, potentially as debt instruments or as money/currency for federal income tax purposes

IV. Taxpayer Reporting - Priority Guidance

A. De Minimis Digital Asset Receipts

• Issue: Administrative burdens of tracking frequent small rewards (staking, airdrops, hard forks) may exceed transaction value
• Proposal: Administrative guidance addressing de minimis receipts of digital assets for airdrops, staking, hard forks, and mining rewards (for non-node operators/non-miners)

B. Timing of Income from Mining and Staking

• Issue: Current guidance requires inclusion of fair market value at time of receipt
• Proposal: Review and consider clarifying, modifying, or reversing guidance on timing of income from staking and mining
• Possible Legislation: Several bills proposed to defer inclusion until sale/disposition

C. Section 6038D Digital Asset Reporting

• Issue: Section 6038D doesn't explicitly refer to digital asset accounts, creating potential for tax evasion through offshore exchanges
• Proposal: Legislation requiring taxpayers to report foreign digital asset accounts (custodial accounts at foreign exchanges/service providers)

D. Section 6038D and FBAR Reporting Streamlining

• Issue: Duplicative reporting between Form 8938 (Section 6038D) and FBAR
• Proposal: Legislation permitting single form submission available to both IRS and FinCEN, conforming information requirements and thresholds

V. Third-Party Information Reporting - Priority Guidance

A. Electronic Furnishing of Form 1099-DA

• Issue: Current rules require affirmative consent for electronic delivery, creating unnecessary costs for digital asset exchanges
• Proposal: Regulations providing less burdensome method of obtaining consent for electronic furnishing of Form 1099-DA payee statements

B. Crypto-Asset Reporting Framework (CARF) Implementation

• Issue: Need to prevent tax evasion through offshore digital asset exchanges
• Context: Over 65 jurisdictions committed to implementing CARF as of May 2025
• Proposal: Regulations implementing CARF that:
  • Take stakeholder concerns into account
  • Minimize burdens on brokers
  • Do not impose new reporting requirements on DeFi transactions
  • Coordinate with existing Section 6045 regulations timing

C. Basis Reporting on Transferred Digital Assets

• Issue: Basis information not always available when assets transferred between exchanges
• Proposal: Regulations requiring basis information reporting when digital assets transferred between centralized digital asset exchanges (implementing IIJA Section 6045A)

D. Digital Assets Received in Trade or Business

• Issue: IIJA expanded reporting requirements but created privacy concerns and potential disincentive for digital asset use
• Proposal: Regulations implementing reporting in manner that addresses stakeholder concerns
• Possible Legislation: Conform reporting requirements between FinCEN and IRS, reexamine dollar thresholds

VI. Legislative Proposal - CARF Implementation

• Issue: IRS lacks authority to require reporting on controlling persons of shell companies
• Proposal: Legislation requiring digital asset brokers to report information on foreign controlling persons of certain passive entities

VII. Key Themes

1. Pro-innovation approach: Remove regulatory barriers to digital asset growth
2. Administrative simplification: Reduce compliance burdens, especially for de minimis transactions
3. International coordination: Implement CARF to prevent tax evasion through offshore exchanges
4. Clarity and certainty: Provide clear guidance on characterization and treatment of digital assets
5. Streamlining: Reduce duplicative reporting requirements
6. Self-custody protection: Remove rules that force individuals into custodial relationships