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Administration Releases Sweeping Report on Digital Asset Policy

Administration Releases Sweeping Report on Digital Asset Policy

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The Administration has released a 166-page framework for adoption, regulation and taxation of digital assets in the U.S. The report’s introduction begins with President Trump’s crypto approval rating. As of June 2025, the President’s approval rating among investors in cryptocurrencies was 72%, the report notes. The information comes from private surveys, including one by the National Cryptocurrency Association. That trade group along with others offer their take on the size of the digital asset market in the U.S.

  • More than one in five Americans, or over 68 million people, own cryptocurrencies.
  • 83% of institutional investors planned to increase their allocations to digital assets in 2025.
  • The first quarter of 2025 saw venture capitalists deploy $4.8 billion into crypto and blockchain-focused startups, supporting industry forecasts of a 70% year-over-year increase in total venture dollars invested.

With this background, the report goes on to discuss regulation, banking changes, U.S. dollar-backed stablecoins, and, finally, what the Administration would like to see for digital asset tax policy.

Tax Policy Outline

“Federal tax policy should recognize the unique characteristics of digital assets and address longstanding requests for guidance from investors and entrepreneurs.” This core recommendation underpins the report’s call for legislative proposals and IRS guidance, described below.  

New Guidance

The report calls on Treasury and the IRS to publish guidance on key topics, including:  

  • For the corporate alternative minimum tax, adjusted financial statement income should not include financial accounting unrealized gains and losses on cryptocurrency, or on investments generally, other than stock and partnership interests.
  • Whether wrapping and unwrapping transactions are taxable transactions. These transactions convert a cryptocurrency from one blockchain into a wrapped token that can be used on another blockchain
  • Treatment of de minimis receipts of digital assets and whether they should be reported or taxed. The guidance could apply to airdrops, staking, hard forks and mining rewards for taxpayers who do not operate a node or carry out digital asset mining.

Revise Previous Guidance

Treasury and the IRS should review previously-issued guidance related to the timing of income from staking and mining—popular methods to earn cryptocurrencies–and should consider whether to clarify, modify or reverse that guidance.

New Legislation

Congress should enact legislation that would:

  • Include digital assets in the wash sale rules
  • Apply Section 1058 no gain/no loss treatment to loans of actively traded fungible digital assets
  • Treat digital assets as a new class of assets subject to many tax rules now applicable to securities or commodities

With regard to modifying securities and commodities rules and extending them to digital assets, the report identifies the following relevant Code provisions:

Alternatively, the report suggests legislation could instead clarify when a digital asset commodity or other digital asset is treated as a security or as a commodity for federal income tax purposes.

Other issues that should be addressed are described below.

Characterize payment stablecoins: If payment stablecoins are treated as debt, Congress should consider whether existing income tax rules discourage the use of payment stablecoins as cash-equivalents. In particular, legislation should address the wash sale and anti-bearer bond rules.

Investment trusts: Whether a trust that otherwise qualifies as an investment trust treated as a grantor trust fails to qualify if the trust stakes digital assets owned by the trust.

Foreign accounts: The extent to which taxpayers must report foreign digital asset accounts. A foreign digital asset account would be a custodial account that holds digital assets that is maintained by a foreign digital asset exchange or other foreign digital asset service provider.

Basis reporting: Regulations should be proposed requiring basis information to be reported when digital assets are transferred between centralized digital asset exchanges.

Third-party information reporting: Treasury and the IRS should propose regulations that give brokers a less burdensome method of obtaining consent from customers to furnish Form 1099-DA, Digital Asset Proceeds From Broker Transactions.

Also, the report asks Treasury and the IRS to address reporting requirements that discourage the use of digital assets being paid to a trade or business in the ordinary course of commerce.

Stakeholders Request Specific Guidance

The Administration’s plan also identifies other issues the digital assets industry and stakeholders have specifically requested be addressed in guidance.

  • Valuation: Guidance on how to value digital assets that are traded on multiple exchanges or are thinly traded, for purposes of determining amount realized and basis.
  • NFTs: Guidance on non-fungible tokens, including whether they are treated as collectibles.
  • Losses on digital assets: Guidance relating to losses on digital assets, including the standards and acceptable proof for worthlessness and abandonment and when losses may be deducted if they are held by a taxpayer that becomes bankrupt. Also, guidance relating to thefts of digital assets.
  • Charitable deductions: Legislation removing the requirement for a qualified appraisal for charitable donations of digital assets worth more than $5,000.

Observations

Despite the new GENIUS Act, bipartisan legislation recently enacted to develop a uniform stablecoin policy for the U.S., many tax and other regulatory issues relating to digital assets are still unsettled. The Administration’s digital assets executive order and this follow-up report are designed to put the key issues on the table and launch Treasury and IRS efforts to clarify the tax treatment and reporting requirements. Still, there is much uncertainty as to how these efforts will play out, but the direction seems positive for the digital asset industry and for investors. It is important to consult your Frazier & Deeter financial and tax advisors when planning your digital asset strategy.

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