President Trump's Executive Order on digital assets, EO 14178, has tasked the President’s Working Group on Digital Asset Markets with producing a report to reassess outdated policies affecting cryptocurrency innovation. As part of this effort, the Treasury Department is expected to address significant issues related to IRS guidance and FinCEN rulemaking.
One major concern involves the taxation of block rewards. The IRS currently treats these rewards as ordinary income at creation, a stance formalized in Revenue Ruling 2023-14 and IRS Notice 2014-21. Critics argue that this approach misunderstands block rewards as they are new property created by network participants rather than income from a third party. "Block rewards should be treated the same as other forms of newly created property," it was argued during testimony before the House Ways and Means Oversight Subcommittee. Coin Center supports the Jarrett lawsuit challenging this IRS position.
Another issue is Treasury's October 2023 proposal on cryptocurrency mixers, which would classify all mixing transactions as a primary money laundering concern. This could lead to financial institutions reporting customers' data for engaging in privacy-preserving behaviors. Coin Center argues that such measures infringe on civil liberties and fail to align with EO's directive for responsible innovation.
Coin Center has urged Treasury to revisit outdated guidance on block rewards and direct FinCEN to revise its rulemaking efforts. These actions are seen as necessary steps to protect users' rights and maintain America's leadership in digital asset innovation.
