Blockchain Association is pushing for a fundamental rethink of how digital assets are taxed, arguing that existing Internal Revenue Service rules were designed for traditional property and are ill-suited to modern blockchain activity.
The proposals, outlined in a recent policy paper from leading trade associations, come as the Internal Revenue Service is tightening enforcement and expanding reporting requirements across the crypto sector.
Under current IRS guidance, cryptocurrency is classified as property, not currency. This framework, first formalized in 2014 and expanded over the past decade, means that nearly every crypto transaction can trigger a taxable event.
Key features of the existing system include:
Recent rules have also increased reporting obligations for exchanges and brokers, requiring detailed disclosures to both users and the IRS.
Crypto advocacy groups argue that treating digital assets strictly as property creates compliance burdens that are out of step with how blockchains are actually used.
Their proposals focus on modernizing tax treatment rather than eliminating taxes altogether. Among the ideas being floated:
Supporters say the goal is clarity and consistency, particularly as onchain activity expands beyond speculation into payments, decentralized finance, and enterprise use.
The timing is notable. IRS enforcement around crypto has intensified, while Congress continues to debate broader digital asset legislation. At the same time, the US crypto industry is attempting to position itself as compliant, transparent, and globally competitive.
Industry groups argue that without updated tax rules, the US risks pushing innovation offshore or discouraging participation in blockchain networks altogether.
The IRS, however, has maintained that existing tax principles already provide sufficient coverage, even as new technologies emerge.
Even if some of the industry’s proposals gained traction, taxes on crypto would not disappear. Capital gains, income reporting, and enforcement would remain central pillars.
The real shift would be when and how taxes are triggered, rather than whether they apply. Any changes would also require legislative action or formal regulatory updates, not just policy recommendations.
