U.S. House’s tax committee advances crypto tax bill in wake of Clarity Act loss

Less than 24 hours after the collapse of the crypto industry’s market structure bill, the tax committee in the U.S. House of Representatives has advanced another important industry effort that would clarify crypto tax treatment and ease burdens on casual transactions.

At a Wednesday hearing known as a markup, in which a committee evaluates a bill and considers changes before deciding whether to advance it to the wider chamber of lawmakers, the panel voted 38-5 to endorse the bill and forward it to the rest of the House, signalling massive bipartisan support for the measure.

The Digital Asset Tax Certainty Act, revealed earlier this week by the House Ways and Means Committee, would provide crypto users long-awaited answers on what are known as “de minimis” transactions, or small, routine payments, which currently trigger difficult tax accounting. The legislation also addresses how crypto income would be recognized for tax purposes, transfers, wash sale rules, mining, staking and requirements for brokers, and it generally seeks to ensure that digital assets get similar treatment as other assets.

Its movement comes at a late stage in the congressional session, leaving it little time for further action from lawmakers unless it can draw attention during the brief period of roughly five weeks of congressional work scheduled between the November elections and the start of the next session in January. But establishing some legislative momentum on the bill now may help smooth the way for future efforts with the same aim.

Apart from the industry’s primary focus on getting a market structure bill set into law, which failed a key Senate vote on Tuesday, establishing a crypto tax law has been another major priority.

The small-transactions threshold is set at $10 in this legislation — significantly lower than some of the previous efforts at tax bills, but an idea seen as necessary to make digital assets more practical to use in payments. Committee Chairman Jason Smith noted that without it, buying a cup of coffee “triggers an absurd maze of compliance.”

“We are establishing basic tax rules for digital assets,” said Representative Steven Horsford, a Nevada Democrat who has been pushing such tax policy over the past year. “For everyday transactions, the package provides specific treatment for qualifying dollar stablecoins and small network and transaction fees.”

The legislation expands various taxation rules on other financial assets to crypto, seeking parity between the new technology and traditional modes of finance.

Though the effort was largely bipartisan, some linked the industry to one of the industry’s biggest benefactors, President Donald Trump, and questioned why the crypto industry should get attention while other taxpayer needs don’t.

“This committee remains the only place in Congress that’s rushing to provide favors to this industry,” said Representative Lloyd Doggett, a Democrat from Texas who is a senior member of the committee, noting the Senate’s failure to advance the Digital Asset Market Clarity Act.

“I’ve not had anyone come up to me and say, ‘You know what? This committee really ought to prioritize is new tax breaks and loopholes for the crypto industry,'” Doggett said before the committee vote. “Once again, this committee makes very clear that while it ignores the real needs of ordinary Americans that are suffering from failed Trump policies, it eagerly responds to moneyed interests with the strongest lobbyists and the biggest political action committees.”

Read More: U.S. House panel shares crypto tax bill ahead of hearing later this week