How will Trump reform the crypto tax system?

Author | FinTax

News Overview

News 1: U.S. President Trump signed a joint Congress resolution on April 10, 2025, overturning a provision during the Biden administration that requires the decentralized finance (DeFi) agreement to report relevant information to the U.S. tax authority, the Internal Revenue Service. According to the original regulations, DeFi platforms, such as decentralized exchanges, need to submit the total revenue from their cryptocurrency sales and provide detailed information of participating traders.

News 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. crypto projects such as XRP and HBAR will soon be out of capital gains tax. This means investors in these projects can spend less money when cashing in cryptocurrencies to make profits. However, crypto projects located outside the United States will face a high capital gains tax of 30%. The move could help bring more crypto innovation to the United States and provide a huge comparative advantage for domestic projects.

News source: https://www.ifcreview.com/news/2025/january/us-eric-trump-announces-zero-tax-for-us-crypto-investors/

FinTax opinion

Trump has been a critic of cryptocurrency until 2022. In 2019, Trump once called Bitcoin a "scam" and expressed suspicion of crypto assets by calling cryptocurrencies "money created out of thin air." However, Trump's stance on cryptocurrencies has undergone a radical change in 2022. In December of that year, he launched his own-themed NFT, seizing the aftermath of the bull market and the NFT boom, earning millions of dollars. Since then, Trump has transformed from a public critic of cryptocurrency to an active participant. By 2024, he became the first U.S. presidential candidate to accept cryptocurrency donations and listed a series of commitments to boost growth in the cryptocurrency industry, playing the "crypto card" in the campaign. A few days ago, Trump signed the first cryptocurrency bill in the United States to become a law, officially repealing the DeFi broker tax reporting rules previously issued by the IRS. At the beginning of the release of the rule, the crypto industry generally believed that this would cause a heavy blow to the DeFi ecosystem and the entire crypto industry. In fact, as early as during his election for this presidential election, Trump promised to carry out drastic reforms to the cryptocurrency-related systems. After the beginning of this term, whether it is personnel changes in the regulatory authorities, the gradual introduction of relevant regulations, or the authorization to issue $Trum, it shows that Trump is fulfilling his campaign commitments and showing a positive embrace and willingness to promote cryptocurrencies.

Currently, U.S. cryptocurrency investors are facing greater tax pressure. In the United States, short-term holdings (less than 1 year) of cryptocurrencies are subject to a capital gains tax of up to 37%, while mining income, pledge income and airdrop income are all considered ordinary income tax by the IRS. At the same time, the cryptocurrency tax system in the United States is relatively complex, and both individuals and enterprises need to spend more time and resources to complete tax declarations, and the tax compliance cost is relatively high. Since the beginning of 2025, rumors about Trump's reduction in cryptocurrency tax rates have been heard. As the news said, Trump's son Eric Trump once made a high-profile claim that he would implement zero capital gains tax on "local American projects" such as XRP and HBAR, rather than local American projects, which would face a 30% capital gains tax. However, for months, facing public opinion and industry expectations, the relevant rumors have not come true. Especially at the White House Cryptocurrency Summit on March 7, Trump still did not announce large-scale reforms to the cryptocurrency tax system as expected by the outside world. Even in the cryptocurrency regulatory system, Trump's related measures are considered to be insufficient, which only shows the change in regulatory attitude. Even though the abolition of the DeFi broker tax reporting rules this time is of great significance to the sustainable development of the crypto industry, this is essentially a passive negative measure, mainly involving tax procedures, and is not an active tax reduction and exemption policy.

Many realistic factors are reflected behind Trump's "silence". First, although the relevant crypto tax reform commitments have triggered a short-term market carnival, its policies face fundamental legal obstacles. Article 1, paragraph 8 of the U.S. Constitution clearly stipulates that "the right to collect taxes is exclusively enjoyed by Congress", and the president has no right to unilaterally adjust the tax rate. Adam Cochran, partner at Cinneamhain Ventures, pointed out directly and sharply: "...This (referring to Trump's announcement of adjusting the cryptocurrency-related tax rates) is not more effective than claiming that I am a cupcake." Second, the game between the Democratic and Republican parties extends from the federal government to various states and places. Any reform of Trump needs to overcome the many interferences and obstacles of the Democratic Party, especially on major issues such as taxation. The relevant tax relief bills may face a long tug-of-war. Third, at the current stage, the Trump administration mainly focuses on overturning the Biden administration's series of suppression policies on the crypto industry, especially expressing its support for Congress to pass legislation to provide regulatory certainty for the cryptocurrency industry. This shows that the Trump administration is more inclined to express support for the crypto industry through overall policies (such as regulatory loosening) rather than touching legal restrictions (such as tax-exempt legislation). This strategy can not only avoid direct conflict with Congress, but also strengthen the image of crypto-friendly with an "anti-establishment" narrative. In short, as a politician, Trump needs to fulfill his campaign promises to maintain his credibility and consolidate his voter base, and also ensure the legitimacy and rationality of his own behavior to avoid unnecessary trouble. How to mediate from it is a test of Trump's political wisdom.

Trump has announced plans to build the United States into the world's cryptocurrency capital. Despite many attempts and efforts in related policies, cryptocurrencies have almost erased all the gains since Trump's victory at the end of last year as US reciprocal tariffs triggered turmoil in global financial markets. CoinGecko data shows that before Trump announced the suspension of reciprocal tariffs, the total market value of cryptocurrencies fell by about 12% to $2.47 trillion, almost returning to the level before Trump won the election. US cryptocurrency investors are looking forward to a beautiful new world with zero capital gains tax, but what is present in front of them is the chaos caused by the impact of tariff policies. This makes people confused: Where is Trump's crypto tax reform?