U.S. Senate Committee on Banking, Housing and Urban Affairs publishes Warren’s questioning on proposed crypto tax breaks and reporting carve-outs

The U.S. Senate Committee on Banking, Housing and Urban Affairs released a minority press statement and transcript of Ranking Member Elizabeth Warren’s questioning of witnesses at the Senate Finance Committee hearing on “Examining the Taxation of Digital Assets.” Warren framed several “clarification” proposals as industry-backed special rules that could reduce crypto tax burdens compared with similar traditional financial transactions and weaken reporting intended to detect money laundering and tax evasion. In the exchange, Warren cited an estimate that crypto holders are not paying at least USD 50bn per year in taxes owed, and pressed witnesses on three specific proposals. These included a de minimis exemption allowing crypto transactions under USD 300 to go unreported, which witness Andrea Kramer said would result in lower taxes than equivalent transactions in gold or equities and which Warren associated with a USD 5.8bn benefit to crypto investors using Joint Committee on Taxation estimates. Warren also challenged a proposal that would allow crypto miners and stakers to defer tax on crypto earned as income until it is sold, which Kramer agreed would reduce taxes versus comparable service providers and which Warren put at USD 4.3bn based on the Joint Committee on Taxation. Finally, Warren questioned whether exempting crypto transactions from reporting to the Internal Revenue Service and the Financial Crimes Enforcement Network for receipts over USD 10,000 would make it harder to identify money laundering and criminal tax evasion, with Professor Annette Nellen noting the reporting requirement was enacted in November 2021 and is awaiting implementing regulations.