Trump's encryption tax reform: Where is the road?

News Overview

News 1: On April 10, 2025, U.S. President Trump signed a joint resolution of Congress that overturned a regulation from the Biden administration requiring decentralized finance (DeFi) protocols to report relevant information to the U.S. tax authority - the IRS. Under the original regulation, DeFi platforms, such as decentralized exchanges, were required to submit the total earnings from their cryptocurrency sales and provide detailed information about the participants in the transactions.

News 2: Eric Trump recently (January 2025) mentioned that U.S. crypto projects like XRP and HBAR will soon not be subject to capital gains tax. This means that investors in these projects can spend less when cashing out cryptocurrencies for profits. However, crypto projects located outside the U.S. will face a high capital gains tax of 30%. This move could help bring more crypto innovation to the U.S. and provide a significant comparative advantage for domestic projects.

FinTax Perspective

Prior to 2022, Trump was a critic of cryptocurrency. In 2019, Trump had called Bitcoin a "scam" and expressed skepticism about crypto assets by referring to the cryptocurrency as "money created out of thin air." However, in 2022, Trump's stance on crypto took a complete turn, and in December of that year, he launched NFTs with his own theme, seizing the aftermath of the bull market and the NFT boom and earning millions of dollars, and since then, Trump has transformed from a public critic of cryptocurrencies to an active participant. By 2024, he became the first U.S. presidential candidate to accept cryptocurrency donations and laid out a series of promises to boost the growth of the cryptocurrency industry, playing the "crypto card" in the campaign. A few days ago, Trump signed the first cryptocurrency bill into law in the United States, officially repealing the tax reporting rules for DeFi brokers issued by the Internal Revenue Service, and at the beginning of the rule, the crypto industry generally believed that it would bring a heavy blow to the DeFi ecosystem and the entire crypto industry. In fact, as early as the current presidential campaign, Trump promised to carry out drastic reform of the cryptocurrency-related system, and after the beginning of this term, whether it is the personnel changes in the regulatory authorities, the gradual introduction of relevant regulations, or the authorization of the issuance of $Trump, it shows that Trump is fulfilling his campaign promises and showing a positive embrace and willingness to promote cryptocurrencies.

Currently, U.S. cryptocurrency investors are facing greater tax pressure. In the U.S., short-term holdings (less than 1 year) of cryptocurrencies are subject to a capital gains tax of up to 37%, while mining income, staking income, and airdrop earnings are taxed by the IRS as ordinary income. At the same time, the U.S. cryptocurrency tax system is relatively complex, and both individuals and businesses need to spend more time and resources to complete tax filings, and tax compliance costs are high. Since the beginning of 2025, there have been rumors that Trump will reduce the cryptocurrency tax rate, as mentioned in the news, Trump's son Eric Trump (Eric Trump) has made a high-profile announcement of zero capital gains tax on "domestic projects" such as XRP and HBAR, while non-domestic projects will face a 30% capital gains tax. However, in the face of public opinion and industry expectations for several months, the relevant rumors have not come true, especially at the White House cryptocurrency summit on March 7, Trump has not announced a large-scale reform of the cryptocurrency tax system as expected, and even in terms of the cryptocurrency regulatory system, Trump's relevant measures are considered insufficient, more to illustrate the change in regulatory attitude. Even, although the abolition of the tax reporting rules for DeFi brokers is of great significance to the sustainable development of the crypto industry, it is essentially a passive and passive measure, mainly involving tax procedures, and it is not an active tax reduction and exemption policy.

Trump's "silence" reflects multiple realities. First, although the promise of the relevant crypto tax reform has triggered a short-term frenzy in the market, its policy implementation faces fundamental legal obstacles. Article 1, Section 8 of the U.S. Constitution clearly stipulates that "the power to collect taxes shall be vested in Congress exclusively" and that the President has no authority to unilaterally adjust tax rates. Adam Cochran, a partner at Cinneamhain Ventures, pointed out pointedly: "...... This [referring to Trump's announcement of a change in cryptocurrency-related tax rates] is no more effective than my claim to be a cupcake. "Second, the game between Democrats and Republicans extends from the federal union to the states, and any reform by Trump will need to overcome many distractions and obstacles from the Democrats, especially on major issues such as taxes, which may face a long tug-of-war over related tax cuts. Third, at this stage, the Trump administration is mainly focused on reversing the Biden administration's series of crackdown policies on the crypto industry, especially explicitly expressing support for Congress to pass legislation to provide regulatory certainty for the crypto industry. This suggests that the Trump administration is more inclined to show its support for the crypto industry through overall policies (such as deregulation) rather than touching legal exclusions (such as tax exemption legislation). This strategy both avoids direct conflict with Congress and reinforces the crypto-friendly image with an "anti-establishment" narrative. In short, as a politician, Trump needs to fulfill his campaign promises to maintain his credibility and strengthen his voter base, and he also needs to ensure the legitimacy and rationality of his actions to avoid unnecessary trouble, and how to mediate between them is a test of Trump's political wisdom.

Trump once announced plans to make the United States the world's cryptocurrency capital. Despite numerous attempts and efforts in related policies, the global financial market was shaken by the tariffs imposed by the U.S., causing cryptocurrencies to nearly erase all gains since Trump's victory at the end of last year. According to CoinGecko data, before Trump announced the suspension of the tariffs, the total market capitalization of cryptocurrencies had dropped by about 12% to $2.47 trillion, nearly returning to the level before Trump's election victory. American cryptocurrency investors are eagerly looking forward to a new world with zero capital gains tax, but what lies ahead is a chaotic situation caused by the impact of tariff policies, which raises the question: where exactly is Trump's cryptocurrency tax reform headed?