Senators Slam Treasury’s Unrealized Crypto Tax Plan—’Innovation Strangulation’
Washington’s latest crypto clash erupts as lawmakers push back against proposed tax rules targeting paper gains. The Treasury’s plan could force investors to pay taxes on assets they haven’t even sold—because nothing says ’financial innovation’ like penalizing hodlers during a bear market.
Key senators argue the move would cripple US competitiveness while doing little to stop actual tax evasion (but hey, at least it’ll create more paperwork). The debate highlights the growing tension between crypto’s borderless nature and regulators’ love of control.
As usual, the government wants its cut—even if the ’gains’ exist only in some accountant’s spreadsheet. Meanwhile, Bitcoiners whisper: ’Not your keys, not your coins... but somehow still your tax liability?’
Forced liquidations
Lummis and Moreno warned that the current policy may force firms to liquidate crypto assets just to meet tax obligations. Foreign firms, which follow different accounting standards, are unaffected, raising concerns over a widening competitive gap.
“We respectfully urge Treasury to act swiftly,” the senators wrote. “Failure to provide this clarity… will disincentivize entities from maintaining large holdings of digital assets.”
The Senators have called on the Treasury to issue interim guidance before finalizing the rule, saying that prompt action WOULD prevent a misguided tax policy from taking hold.
Lummis and Moreno said they were ready to work with Treasury officials directly on this issue.
The senators’ warning follows a series of decisive moves in Washington under President Donald TRUMP to unwind Biden-era crypto regulations and reposition the U.S. as a hub for digital asset innovation.
In March, the Senate passed a resolution to overturn the IRS’s “DeFi broker rule,” which would have forced decentralized finance protocols to report user activity like traditional financial intermediaries.
That rule, finalized during President Biden’s final weeks in office, was heavily criticized by industry groups for being unworkable and invasive.
In April, President Trump signed the resolution into law, marking the first crypto-related legislation enacted by any U.S. president.
Meanwhile, Senator Lummis has emerged as a key legislative figure in the crypto space.
She has backed crypto through earlier bipartisan efforts, including the 2022 Lummis-Gillibrand Responsible Financial Innovation Act, which proposed a full regulatory framework for digital assets.
Though that bill stalled, it laid the groundwork for much of today’s congressional momentum around crypto legislation.
In March, she reintroduced the Bitcoin Act, which would codify President Trump’s executive order establishing a national Bitcoin reserve and authorize the Treasury to purchase up to one million BTC over five years.
Edited by Sebastian Sinclair
