House Turns to Crypto Taxes as Clarity Act Negotiations Continue in the Senate
Ways and Means examines seven crypto tax proposals as Senate lawmakers continue negotiations to bring the Clarity Act to the floor
Welcome to the Monday edition of the Crypto In America newsletter!
What you'll read: Crypto taxes take center stage this week as negotiations over the Clarity Act drag on. Plus, what we're watching this week and a roundup of weekend headlines.
The House will turn its attention to crypto tax reform this week as Senate lawmakers continue negotiations to bring the Clarity Act to the floor.
The lower chamber’s chief tax-writing committee, Ways and Means, will take up the issue Tuesday afternoon in a hearing featuring experts from Fidelity, Coinbase, Coin Center and New York University. The committee will also examine seven discussion drafts that would overhaul how digital assets are taxed in the United States.
The bills effectively break apart the broader Digital Asset PARITY Act introduced in December by Reps. Max Miller (R-OH) and Steven Horsford (D-NV), along with similar legislation from Senator Cynthia Lummis (R-WY), into a series of standalone proposals covering stablecoin transactions, mining and staking, crypto lending, wash sale rules, charitable donations and taxpayer disclosures.
The move has received praise from some of the industry's leading advocacy groups, including The Digital Chamber, The Blockchain Association and the Crypto Council for Innovation. The Digital Sovereignty Alliance, which promotes ethical innovation in blockchain, described the effort as one of the most consequential developments yet in U.S. crypto tax policy.
“Breaking the PARITY Act into seven standalone drafts on staking, mining, lending, and wash sales gives lawmakers a clearer path to get the details right rather than rushing an omnibus,” the group said.
The reaction has not been uniformly positive. Some industry participants have privately raised concerns about specific provisions in the package, though none were willing to speak publicly ahead of Tuesday's hearing.
Illinois Crypto Tax Backlash
The federal tax debate comes as Illinois prepares to implement a sweeping $56 billion state budget that includes a controversial 0.2% tax on certain digital asset transactions, a measure industry groups warn could drive crypto businesses and investment out of the state.
“I think the legislature, by adding this 20 basis point tax…is truly telling you to pack your bags and move,” Olta Andoni, executive director of the Illinois Blockchain Association, told Crypto In America.
In a joint letter, the Illinois Blockchain Association and the Digital Chamber called the legislation substantively unsound, procedurally deficient, and economically destructive, urging the legislature to reconsider the measure.
Illinois is home to more than 300 startups and established firms focused on crypto and blockchain technology. Its largest city, Chicago, is a global hub for futures and derivatives trading, with institutions such as CME Group and Cboe offering regulated crypto products and exposure to digital assets.
The state budget has cleared the legislature and now awaits Governor JB Pritzker’s signature.
Clarity Act Negotiations Roll On
Efforts to bring the Clarity Act to the Senate floor are set to continue this week as lawmakers and the White House work to close remaining gaps on ethics and DeFi and reconcile the Banking and Agriculture Committee texts.
Senator Cynthia Lummis (R-WY) told Crypto In America on Wednesday that while a vote before the July 4 recess remains possible, the bill is more likely to be taken up after lawmakers return on July 13.
“We have to wrap the Banking Committee bill with the Ag Committee’s bill, with the ethics provisions, with some changes to the Genius Act,” Lummis said. “And so to get all of those pushed into one bill and then get the 60 votes necessary for cloture on the floor of the Senate might take a little more time than the Fourth of July.”
The GENIUS Act changes Lummis referenced stem from an amendment offered by Senator Bill Hagerty (R-TN) during the Banking Committee markup that makes a number of technical revisions to the legislation passed last year.
Although ethics provisions and securing law enforcement buy-in for the current DeFi language remain top priorities, the debate over stablecoin yield continues to simmer beneath the surface. Banking groups are ramping up their campaign against the Clarity Act’s stablecoin yield compromise, with JPMorgan CEO Jamie Dimon recently signaling that banks remain opposed to the bill’s current approach.
At the heart of the dispute is whether stablecoins will pull deposits away from traditional banks. Banking groups argue the bill's yield compromise could still lead to deposit migration, while supporters say those fears are overblown and that banks can benefit from integrating digital asset services into their existing offerings.
Last week, former Pennsylvania Senator Pat Toomey, who served as ranking member of the Senate Banking Committee, spoke at a Republican lunch on the importance of passing the Clarity Act. According to sources familiar with the remarks, Toomey sought to reassure lawmakers that banks’ fears of deposit migration are largely overstated as the banking lobby works to convince senators that supporting the bill could come at the expense of local banks.
Lummis echoed that view, arguing that the growth of stablecoins has not come at the expense of the banking system.
“If you look at the statistics, as stablecoins have been issued and become embedded in our economy, deposits in banks have gone up,” Lummis said. “Those are the kind of facts that we need to share… so they can see that these types of financial products can coexist.”
Meanwhile, the industry's lobbying campaign is also intensifying. On Monday, more than 200 crypto organizations signed a letter urging Senate leaders to quickly bring the Clarity Act to the floor.
👀 What To Watch This Week
Monday
10:15 a.m.: SEC Chair Paul Atkins will speak at the National Investor Relations Institute conference in Chicago.
ETHConf kicks off its three-day event in New York City.
Tuesday
9:30 a.m.: The U.S. Chamber of Commerce kicks off its Capital Markets Summit, which will feature discussions on the future of banking as well as a panel on "nonbank systemic risk" featuring Crypto Council for Innovation CEO Ji Kim.
2:00 p.m.: The House Ways and Means Committee holds a hearing on crypto tax reform.
Wednesday
8:30 a.m.: The Bureau of Labor Statistics releases the May Consumer Price Index (CPI), a key inflation gauge.
Thursday
10:00 a.m.: The Senate Banking Committee holds a hearing on artificial intelligence.
Friday
10:00 a.m.: The University of Michigan publishes its May consumer sentiment survey.
11:00 a.m.: The House Financial Services Committee's Task Force on Monetary Policy holds a hearing examining the structure of the Federal Reserve System.
Weekend News Flash
ICYMI: The biggest headlines from Friday and the weekend.
Bitcoin is back above $63,000 as corporate buyers continue to accumulate, with Strategy adding $100 million worth of bitcoin and Vivek Ramaswamy's Strive acquiring 32 BTC.
Grayscale filed for a Canton spot ETF.
JPMorgan, Citi and other major U.S. banks are planning a tokenized deposit network aimed at competing with the growing influence of stablecoins and crypto-native firms.
Better and Coinbase have issued the first Fannie Mae-backed U.S. mortgage using bitcoin as collateral.
The Fed's Beige Book shows steady employment and modest economic growth across the U.S., though inflation is beginning to rise amid higher energy prices tied to the conflict in the Middle East.
CME data now implies just a 4% chance of a Fed rate cut this year following a stronger-than-expected jobs report that showed the U.S. added 172,000 jobs in May while unemployment held steady at 4.3%.
Coinbase is launching pre-IPO trading exposure, starting with a perpetual futures contract tied to SpaceX.
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