1. What did the Blockchain Association ask Congress to do?
The Blockchain Association, a crypto trade group, asked congressional leaders on October 22 to pass bipartisan digital asset tax legislation and set out 10 principles that any such bill should follow. The letter calls for a de minimis exemption for small transactions, wash sale rules for crypto and no tax on transfers between a holder's own wallets, in what it hopes will become crypto tax legislation.
The association says it has more than 100 members. Its letter went to House Speaker Mike Johnson, House Minority Leader Hakeem Jeffries, Senate Majority Leader John Thune and Senate Minority Leader Chuck Schumer, and it was signed by Lindsay Fraser, the group's chief policy officer. Addressing all four party leaders, rather than a single committee, reflects the aim of building support across both chambers and both parties.
2. Why the group says tax rules cannot wait
The letter opens with a number: 67 million Americans now hold and use digital assets, yet the rules that govern how they are taxed were written for an earlier era. The association argues that the existing framework was not designed for assets that can be transferred peer to peer, used in smart contracts or moved across blockchains in seconds.
It also links tax policy to the larger debate over how crypto markets are regulated. According to the letter, progress on market rules cannot fully succeed without a tax framework that is clear and administrable. The group adds that such a framework should be technology-neutral and aligned with economic reality, meaning that the tax treatment should follow what a transaction actually does for the taxpayer and not the particular tool used to carry it out.
The letter closes on a note of reassurance. It says Americans who hold and use digital assets are not asking for special treatment and want to meet their tax obligations, a line aimed at lawmakers wary of carve-outs for a single industry.
3. Which crypto tax principles are in the proposal?
The group calls its list the Digital Asset Tax Principles. It first published them on February 24, timed to a fly-in at which members visited Capitol Hill, and the October letter renews the request. The principles cover a wide range of tax questions, from everyday spending to how rewards are taxed.
The first group of asks concerns small and routine activity. The association wants an exemption for small transactions, so that someone who buys a coffee with a token does not have to calculate a capital gain on a few dollars of price movement. It also wants stablecoins treated like cash, including relief from Form 1099-DA reporting. Stablecoins are designed to hold a steady value, so a gain or loss on spending one is typically negligible, and the group argues that detailed reporting adds work without producing meaningful tax revenue.
A second ask concerns who must report. The group wants broker reporting limited to firms that hold or control customer funds. That definition would leave out non-custodial developers, meaning the people who write software but never take possession of users' assets and therefore have no customer information to report.
4. How would wash sale rules and wallet transfers be treated?
The association supports extending wash sale rules to crypto, with a condition: digital assets must not be put at a disadvantage compared with stocks and other traditional assets. A wash sale occurs when an investor sells an asset at a loss and buys it back shortly afterward, and under current stock rules the loss cannot be claimed for tax purposes. Crypto is widely understood to sit outside that rule today, so the proposal would add a restriction that many traders do not face now. The group appears willing to accept that in exchange for parity with other markets.
On wallets, the position is that moving coins between a holder's own wallets, using smart contracts or bridging across blockchains should not be a taxable event when ownership and economic exposure do not change. The reasoning is straightforward: if a person ends up with the same asset and the same stake in it, no gain has been realized. Bridging, in particular, can look like a sale on paper because tokens are locked on one network and issued on another, which is why the group wants it addressed explicitly.
5. What else is on the list?
The remaining principles deal with income, elections and incentives. Mining and staking rewards would be taxed when the holder disposes of them, not at the moment they are received. The association also asks for an optional mark-to-market election, which would let taxpayers treat holdings as if sold at year-end value, and a safe harbor for foreign persons who trade crypto on US exchanges.
Two further items round out the list. One is an end to appraisal requirements for charitable gifts of widely traded tokens, since a publicly quoted price already exists. The other is research and development tax credits for blockchain development, which would place software work on blockchain networks alongside other qualifying technology research.
Taken together, the principles describe a tax code that treats most digital asset activity like comparable financial activity, adds reporting duties where an intermediary actually holds customer funds, and avoids taxing movements that change nothing about a person's economic position.
6. How is crypto taxed today, and why does it frustrate holders?
In the United States, digital assets are generally treated as property for tax purposes. That means selling a token, swapping it for another or using it to pay for goods can trigger a taxable gain or loss, measured against what the holder originally paid. Each such event has to be tracked, which is manageable for an occasional investor but burdensome for anyone who uses crypto regularly.
The difficulty grows with activity. A person who makes dozens of small payments, moves assets between self-custodied wallets and interacts with decentralized applications may face a long list of reportable events, each requiring a cost basis and a date. The association's principles are largely a response to that complexity, and they try to separate transactions that create real economic gain from those that merely change the form or location of an asset.
Reporting is another pressure point. Form 1099-DA is the information return through which brokers report digital asset sales, and the group wants that regime narrowed so that it applies to firms that actually hold or control customer funds. The concern is that rules written for custodial intermediaries could otherwise reach software developers and protocols that never touch user assets.
7. Why a de minimis exemption is the headline request
A de minimis exemption sets a floor below which a transaction does not need to be reported or taxed. For crypto, the idea is that tiny gains or losses on small purchases are not worth the administrative effort for taxpayers or for the Internal Revenue Service. Supporters say that without such a rule, ordinary spending with digital assets is impractical, because each purchase becomes a separate tax calculation.
The House bill that advanced in September uses a narrow version of the idea, covering crypto used to pay network or trading fees of $10 or less beginning in 2028. The association's letter asks for a broader exemption for small transactions in general. The two proposals therefore overlap but are not identical, and the final threshold, if any is adopted, would be a point of negotiation.
The stablecoin request follows the same logic. Because these tokens are built to stay at a fixed value, treating them like cash would spare holders from reporting gains that rarely exist, and would let them use the tokens for payments without a paperwork trail for every transfer.
8. What the proposals could mean for different kinds of holders
For casual users, the most visible change would be relief on small purchases and on moving assets between their own wallets. For active traders, the introduction of wash sale rules would be a notable shift, since it would limit the practice of selling at a loss and quickly repurchasing the same asset to bank a deduction. The association accepts that trade-off, provided it is applied in a way that treats crypto the same as stocks.
For people who earn tokens through mining or staking, the proposed timing rule would defer taxation until the rewards are sold or otherwise disposed of. Those who prefer a simpler annual calculation could use the optional mark-to-market election. Foreign traders on US exchanges would gain certainty from the proposed safe harbor, and donors would avoid the cost of an appraisal when giving widely traded tokens to charity.
None of these outcomes is certain. They remain requests from an industry group, not law, and lawmakers may accept some, modify others or decline them.
9. Where does crypto tax legislation stand in Congress?
The letter does not name a specific bill. In the House, the Ways and Means Committee advanced the Digital Asset Tax Certainty Act in September. That bill would exclude crypto used to pay network or trading fees of $10 or less from gain or loss calculations, starting in 2028. It is narrower than the association's full list, but it points in the direction of the small-transaction relief the group wants.
The Senate picture is harder. The broader market structure effort, known as the Clarity Act, failed to advance on September 15 when a procedural vote fell short of the 60 votes required. Democrats pressed for ethics limits tied to President Donald Trump's crypto ventures. Because tax provisions and market structure rules are often discussed together, the stall in the Senate affects how quickly any tax measure could move.
That context explains the timing of the letter. With the House committee having acted and the Senate bill stuck, the association is trying to shape the content of tax legislation while the broader debate remains unsettled.
10. What happens next?
No vote on a crypto tax measure has been scheduled, and the letter requests action without proposing a specific legislative vehicle. The next signals to watch are whether the Digital Asset Tax Certainty Act reaches the House floor, whether the Senate finds a path past the 60-vote threshold on market structure, and whether congressional leaders respond to the association's principles with draft text.
Until then, the current rules stay in place. Taxpayers continue to follow existing guidance on gains, income and reporting, while the industry makes its case for a framework that it describes as clear, workable and neutral toward technology.