A new legislative proposal is gaining traction in the U.S. Senate—and it could drastically change how crypto investors, especially those involved in DeFi, are taxed.
On June 5, lawmakers introduced Senate Bill S.2281, aimed at modernizing tax treatment for digital asset transactions, including DeFi, staking, lending, and liquidity provision. The move comes amid growing political pressure to bring clarity to the U.S. crypto framework ahead of the 2025 presidential election.
According to Semafor, the bill is being pushed to merge crypto-specific tax language into the broader federal tax and spending reform package expected later this year.
What’s Inside the Proposed Crypto Tax Bill?
The bill introduces several key changes that could impact how individuals and protocols interact with DeFi protocols:
- DeFi Classification: New definitions for decentralized protocols and smart contracts as “financial intermediaries.”
- Reporting Rules: Platforms facilitating trades or yield generation may be subject to 1099-K-style reporting to the IRS.
- Taxable Events: Specific guidelines on when gas fees, token swaps, or staking rewards trigger a taxable event.
- KYC Requirements: Stronger identity verification guidelines for protocol operators—if identifiable.
If passed, the law would close current regulatory gaps and extend compliance expectations from centralized exchanges to on-chain DeFi platforms.
Why This Matters for U.S. DeFi Users
Until now, many U.S. DeFi participants have operated in a legal gray zone, unsure of when and how taxes apply to yield farming, staking rewards, DAO governance tokens, or LP positions.
Under this new framework, noncompliance may become much riskier. DeFi users could be held to the same standards as traditional brokerages, with penalties for inaccurate reporting or failing to disclose holdings across wallets.
This is part of a larger trend: bridging the regulatory divide between TradFi and DeFi.
“The IRS wants visibility on all taxable activity, whether it’s on Coinbase or Curve Finance,” notes one policy analyst. “This bill is a clear step in that direction.”
Final Thoughts: A Turning Point for Crypto Regulation?
The proposed crypto tax law may still undergo revisions before a final vote, but its message is loud and clear: DeFi is no longer invisible to Washington.For crypto users and builders in the U.S., it’s time to rethink protocol design, wallet privacy, and tax tracking tools. Solutions that simplify compliance—such as automated tax tools and compliant wallet integrations—could soon become essential.
