US lawmakers are accelerating the process of reforming cryptocurrency gambling taxes by 2026. The change to taxes on gambling rewards has already been requested by a bipartisan coalition of 18 members of the House of Representatives led by Mike Carey. They claim that the existing system does not fully reward participants in proof-of-stake systems.
The essential point of contention: double taxation
The controversy revolves around an IRS regulation that taxes as ordinary income as soon as a user receives gambling rewards in 2023. According to lawmakers, this amounts to double taxation. This structure is not similar to traditional asset treatment and does not encourage long-term participation. The practice is similar to that of other newly acquired assets. It is also in line with how miners used to advocate for tax clarity before, even before selling mined tokens.
The letter warns that the existing tax policy is harmful to retail users and also derails American competitiveness in blockchain innovation. Proof-of-stake networks rely on large-scale participation as security. Lawmakers are of the opinion that punitive tax regulations drive developers and validators out of the country, undermining the local crypto ecosystem.
Simultaneous legislative processes gain strength
Meanwhile, Representatives Max Miller and Steven Horsford have introduced the Digital Asset PARITY Bill. The proposal seeks a five-year tax deferral on mining gambling and rewards. It also has a $200 exemption on stablecoin transactions to facilitate daily cryptocurrencies without burdening IRs.
Lawmakers are signaling a sense of urgency with 2026 in sight. The absence of reform could subject millions of cryptocurrency users to a greater tax burden, which legislators consider totally unrelated to economic reality. The bipartisan tone means the tax reform may be one of the first major crypto policy reforms to see the light of day in Congress.
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