The Crypto Tax Bill Split Washington: Why Lobbyists Are Begging Congress to Ditch the 5-Year Deferral Amendment

(SeaPRwire) –

By: Gavin Thorne
This isn’t just a dry tax policy fight. It’s a battle over whether the U.S. will retain its lead in decentralized blockchain infrastructure, and the crypto industry lobby is throwing every resource at stopping a last-minute amendment that could unravel their hard-won compromise. The stakes extend far beyond annual tax filings for small stakers and miners across the nation.
The core of the fight centers on the Tax Clarity for Mining and Staking Act, introduced earlier this month. Current IRS rules tax crypto mining and staking rewards the moment they are earned, even before holders can convert them to cash. The bill would let taxpayers choose when to recognize taxable income: either when rewards hit their wallets, or after they sell the assets. Three major industry groups sent a joint letter to House Ways and Means Chair Jason Smith and ranking member Richard Neal, demanding the bill pass unamended.
Democratic Representative Steven Horsford has introduced an amendment that would cap crypto reward tax deferrals at five years. Crypto Council for Innovation CEO Ji Hun Kim called the change a dealbreaker, saying it would “break” the legislation and generate negligible revenue. The American Bankers Association has also criticized the bill, arguing it favors crypto over traditional investments like stock dividends, where shareholders pay taxes the year they receive payouts. A second crypto tax bill, the PARITY Act, entered Congress in May to exempt small transaction taxes.
The industry lobby’s joint letter warns against reopening negotiations on the bill’s agreed-upon terms. They argue any changes would bring back the very tax uncertainty the bill was written to solve, and could derail bipartisan progress. Kim’s comments on X echoed this, noting that the bill already includes significant concessions framed as an election-year compromise. The groups insist the current text is the only workable solution after years of unclear IRS guidance for blockchain operators.
The debate also highlights a sharp divide between traditional financial firms and crypto operators. Banks argue the bill creates an uneven playing field, while crypto groups say current rules force small stakers to sell rewards just to cover tax bills. Kraken reported sending 56 million tax forms to the IRS in April, with nearly a third of covered transactions under $1 and over 75% below $50. This data underscores how the current tax system burdens even the smallest crypto participants.
Unless Congress votes to table the Horsford amendment, the U.S. risks ceding its early lead in blockchain innovation to overseas jurisdictions with clearer, more favorable tax rules for stakers and miners.
Author bio: Gavin Thorne, an investigative journalist tracking special interests and legislative affairs based in Washington, D.C.