U.S Senate Prepares Landmark Hearing on Digital Asset Taxes

Four expert witnesses have been invited to testify before the Senate Finance Committee as part of the hearing on the taxation of digital assets. Jason Somensatto, Director of Policy at Coin Center in Washington, D.C., will appear to provide insights from one of the nation’s leading nonprofit organizations focused on cryptocurrency policy.

Andrea S. Kramer, a founding member of ASKramer Law, LLC in Chicago, is also scheduled to testify. Her legal expertise is expected to shed light on the complexities of applying existing tax frameworks to rapidly evolving digital financial instruments.

The committee will also hear from Lawrence Zlatkin, Vice President of Tax at Coinbase Global, Inc. As one of the largest U.S. digital asset exchanges, Coinbase’s perspective offers practical insights into how current and proposed tax policies impact both businesses and millions of retail investors.

Rounding out the panel is Annette Nellen, Chair of the Digital Assets Tax Task Force at the American Institute of CPAs. Representing the accounting profession, Nellen is likely to highlight compliance challenges and the importance of clear guidance for tax preparers and taxpayers alike.

Senator Cynthia Lummis of Wyoming put forward a detailed legislative package in July 2025 that proposed significant changes to how digital assets are taxed. Her bill was designed to create more workable rules for users and companies, while reducing burdens on taxpayers and modernizing the federal tax code to reflect the realities of blockchain-based activity. Among the most notable provisions was a de minimis exclusion for small transactions. This change would have allowed individuals to make everyday purchases without having to account for small gains or losses, exempting transactions under $300, up to a cap of $5,000 annually. The aim was to remove barriers to using digital assets for ordinary payments and to ease compliance obligations.

Another aspect of the bill focused on eliminating what many viewed as double taxation in the treatment of mining and staking. Under prevailing interpretations, rewards from these activities could be taxed when they were first received, even if the assets were not sold. Lummis proposed that taxation should occur only when the rewards were sold or exchanged, aligning the tax burden with actual realized gains rather than unrealized inflows. This provision was intended to give miners and stakers a fairer and more predictable tax structure, while also simplifying the way the IRS would need to track and enforce compliance.

The legislation also sought to clarify how lending arrangements in digital assets should be treated. By extending principles similar to those used for securities lending, the bill aimed to ensure that temporary transfers of tokens, provided certain conditions were met, would not themselves be considered taxable events. Instead, the recognition of gains or losses was tied to the ultimate disposition of the assets, which was intended to reduce confusion and provide a straightforward framework for both taxpayers and the IRS. The bill extended wash sale rules, which prohibited taxpayers from claiming a loss if they repurchased the same asset within a set time period, to digital assets. At the same time, it offered traders and dealers the option to adopt mark-to-market accounting, a method already in use in securities markets. These adjustments reflected an effort to harmonize the treatment of digital assets with the established practices governing traditional investments.

Charitable contributions also received attention in the proposal. The bill eliminated the requirement for a qualified appraisal when donating “actively traded digital assets,” bringing the rules in line with how publicly traded securities were handled. This change was meant to make philanthropy using crypto assets more practical and accessible, without imposing unnecessary administrative burdens on donors. To balance these reforms with fiscal responsibility, the proposal included a budgetary estimate projecting that it would generate approximately $600 million in net revenue over the period from 2025 to 2034. This projection underscored the belief that greater clarity and more efficient tax treatment could still contribute positively to federal revenue streams.

The Senate hearing and the Lummis proposal together represent an important convergence of legislative interest and concrete policy design. Senators are expected to use the October session to question experts about the practical burden placed on taxpayers, the risks of double taxation, and the compliance challenges facing both individuals and companies operating in the digital asset space. They may also discuss whether digital assets should be redefined in law, whether reporting requirements for platforms should be expanded, and how best to balance innovation with the need for oversight.

For stakeholders across the industry, this moment carries significance well beyond tax policy. If the Lummis proposals, or a version of them, gain traction in Congress, crypto users could gain much-needed certainty in how their activities are treated. Companies might face lower compliance costs and reduced exposure to audits, and the U.S. market could benefit from a framework that encourages both investment and innovation. On the other hand, if lawmakers are unable to reach consensus, the IRS is likely to continue applying existing rules to a rapidly evolving industry, leaving taxpayers navigating a system that many regard as unclear and at times contradictory.

The weeks ahead will therefore be closely watched. The hearing provides a venue for detailed examination, while the Lummis bill offers a substantive framework for reform. Taken together, they reflect growing recognition within the U.S. government that digital assets are no longer peripheral and that coherent tax policy is necessary to ensure fairness, compliance, and the continued growth of this sector.