Trump's Cryptocurrency Tax Reform: Where Is the Road Leading?
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Trump's Cryptocurrency Tax Reform: Where Is the Road Leading?
American cryptocurrency investors are eagerly anticipating a beautiful new world of zero capital gains taxes, but instead they're facing a chaotic reality brought on by tariff policy shocks.
Navigating Web3 tides with focused insightsBy FinTax
News Overview
News 1: On April 10, 2025, U.S. President Donald Trump signed a congressional joint resolution overturning a rule from the Biden administration that required decentralized finance (DeFi) protocols to report information to the Internal Revenue Service (IRS). Under the original rule, DeFi platforms such as decentralized exchanges were required to report total proceeds from cryptocurrency sales and provide detailed information about users participating in transactions.
Source: https://www.coindesk.com/policy/2025/04/07/president-trump-signs-resolution-erasing-irs-crypto-rule-targeting-defi
News 2: Eric Trump recently (January 2025) mentioned that U.S.-based crypto projects such as XRP and HBAR would soon be exempt from capital gains tax. This means investors in these projects could pay less when cashing out cryptocurrencies for profit. In contrast, crypto projects based outside the United States would face a high 30% capital gains tax. This move could help attract more crypto innovation to the U.S. and give domestic projects a significant comparative advantage.
Source: https://www.ifcreview.com/news/2025/january/us-eric-trump-announces-zero-tax-for-us-crypto-investors/
FinTax Perspective
Prior to 2022, Trump was a vocal critic of cryptocurrency. In 2019, he labeled Bitcoin a "scam" and expressed skepticism toward digital assets by calling them "money made out of thin air." However, Trump’s stance underwent a complete reversal in 2022. In December of that year, he launched his own NFT collection, riding the tail end of the bull market and NFT craze to earn millions of dollars. Since then, Trump has transformed from a public critic into an active participant in the crypto space. By 2024, he became the first U.S. presidential candidate to accept cryptocurrency donations and laid out a series of commitments aimed at promoting the growth of the crypto industry, effectively playing the so-called "crypto card" during his campaign. Just days ago, Trump signed the first cryptocurrency bill in U.S. history into law, formally repealing the IRS's previous broker reporting rules targeting DeFi. When first introduced, those rules were widely seen by the crypto industry as potentially devastating to both the DeFi ecosystem and the broader cryptocurrency sector. In fact, even during his presidential campaign, Trump had pledged sweeping reforms to the crypto regulatory framework. Since taking office, personnel changes within regulatory agencies, gradual rollouts of favorable policies, and even the authorization of the $Trump token all indicate that Trump is fulfilling his campaign promises with a clear posture of embracing and actively supporting the cryptocurrency industry.
Currently, U.S. cryptocurrency investors face significant tax burdens. In the United States, short-term holdings (less than one year) are subject to capital gains taxes as high as 37%. Mining rewards, staking income, and airdrop proceeds are all treated as ordinary income and taxed accordingly by the IRS. Moreover, the U.S. cryptocurrency tax system is relatively complex, requiring individuals and businesses to spend considerable time and resources on compliance, resulting in high tax reporting costs. Since early 2025, rumors have persisted about Trump lowering cryptocurrency tax rates. As reported, Trump’s son Eric Trump publicly claimed that “domestically-based U.S. projects” like XRP and HBAR would enjoy zero capital gains tax, while non-U.S. projects would face a 30% rate. However, over the past several months—despite mounting public speculation and industry anticipation—these proposals have yet to materialize. Notably, during the White House Crypto Summit on March 7, Trump failed to deliver the sweeping tax reform many expected. Even regarding broader crypto regulation, his administration's actions have been viewed as underwhelming, reflecting mostly a shift in regulatory tone rather than substantive policy change. Although repealing the DeFi broker reporting rule is a meaningful step for the sustainable development of the crypto industry, it remains essentially a passive and defensive measure focused on tax procedures—not an active tax reduction or incentive policy.
Trump’s silence reflects multiple underlying realities. First, despite generating short-term market euphoria, proposed crypto tax reforms face fundamental legal obstacles. Article I, Section 8 of the U.S. Constitution clearly states that “the power to tax resides solely with Congress,” meaning the president cannot unilaterally alter tax rates. Adam Cochran, partner at Cinneamhain Ventures, put it bluntly: "...this [Trump announcing changes to crypto tax rates] is no more effective than me declaring myself a cupcake." Second, political battles between Democrats and Republicans extend from the federal level down to states and localities. Any reform effort by Trump must overcome persistent Democratic resistance, especially on major fiscal issues where tax relief legislation could face prolonged gridlock. Third, at this stage, the Trump administration is primarily focused on reversing a series of Biden-era policies perceived as hostile to the crypto industry, particularly by expressing support for congressional legislation that provides regulatory clarity for the sector. This suggests the administration prefers to signal support through broad policy shifts—such as deregulation—rather than venturing into legally sensitive areas like unilateral tax exemptions. This strategy allows Trump to avoid direct conflict with Congress while reinforcing his anti-establishment image as a pro-crypto leader. In sum, as a politician, Trump must balance fulfilling campaign promises to maintain credibility and consolidate voter support, while ensuring his actions remain legally and politically viable to avoid unnecessary backlash. Navigating this delicate equilibrium is a true test of his political acumen.
Trump has proclaimed his intention to make the United States the global capital of cryptocurrency. While he has made numerous attempts and efforts toward this goal, the recent announcement of reciprocal tariffs has triggered turbulence across global financial markets, causing cryptocurrencies to erase nearly all gains since Trump’s election victory last year. According to CoinGecko data, before Trump announced a pause on reciprocal tariff measures, the total cryptocurrency market cap dropped approximately 12% to $2.47 trillion—almost returning to pre-election levels. American crypto investors continue to wait eagerly for the arrival of a utopian new era of zero capital gains taxes, but what they are seeing instead is chaos caused by tariff policies. This raises a pressing question: What is the path forward for Trump’s cryptocurrency tax reform?
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