• Crypto tax clarity is a priority in Congress, with the IRS broker rule causing significant backlash from the industry.

  • Traditional finance's growing influence is shaping crypto policy, as banks and funds push for regulatory changes.

  • Collaboration is essential for crypto’s success in Washington, with bipartisan support paving the way for key reforms.

The most pro-crypto Congress in history is setting the stage for two transformative years. This month, lawmakers focus on pivotal crypto legislation, tax policy, and agency actions. According to Ron Hammond, Director of Government Relations at Blockchain Association, tax clarity and regulatory frameworks will dominate discussions. This focus comes as crypto faces challenges, including the controversial broker rule finalized by the IRS.

Crypto Tax Issues Take Center Stage

Tax clarity is a top priority for the crypto industry in 2025. With the Trump-era tax cuts expiring, Congress aims to push a comprehensive tax bill. Consequently, crypto tax issues like like-kind exchanges, charitable deductions, and retirement account taxation are under scrutiny. However, the newly finalized IRS broker rule has emerged as a pressing concern. This rule imposes expansive reporting obligations, which the crypto community argues are incompatible with decentralized finance (DeFi).

Despite bipartisan opposition and widespread backlash from the industry, the IRS proceeded with its interpretation. The rule has already sparked lawsuits from groups like the Blockchain Association and the Texas Blockchain Council. Hence, Congress is expected to respond through a Congressional Review Act (CRA), marking the year’s first major crypto policy battle.

Growing Influence of Traditional Finance

Traditional finance (trad-fi) institutions are intensifying their influence in Washington. Hammond highlighted that banks and funds have expanded their crypto lobbying efforts since the midterm elections. These firms aim to shape policy as they increase their crypto business lines. Besides trad-fi’s involvement, the crypto industry faces internal debates, such as the proposed Bitcoin strategic reserve.

Some policymakers consider a Bitcoin reserve critical, while others argue for prioritizing token clarity laws. These differing priorities reflect the evolving complexity of crypto policy discussions. Moreover, collaboration will be vital for achieving meaningful results amidst growing political and industry power.

Collaboration Is Key

The next two years present unprecedented opportunities for the crypto industry. However, success hinges on collaboration among stakeholders. With bipartisan support growing and traditional finance players joining the dialogue, crypto stands at a crucial crossroads. Hammond’s role in fostering institutional relations will play a key role in bridging gaps and shaping crypto's future in Washington.

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