U.S. Crypto Firms Warn: Regulatory Uncertainty Threatens Innovation Supremacy

Over 65 cryptocurrency firms and organizations have sent a letter to President Donald Trump, urging the U.S. government to clarify regulations on taxation, financial innovation, and developer protections in the crypto sector. The letter, signed by major players including Ethereum, Solana, and Zcash, emphasizes the need for a unified regulatory framework to reduce uncertainty and foster innovation. The coalition argues that the current patchwork of rules across agencies like the SEC, IRS, and CFTC has created a climate of ambiguity, stifling growth and deterring investment.

Taxation emerged as a top priority in the letter. Industry representatives highlighted that the IRS's 2023 guidelines, which tax staking rewards upon receipt rather than sale, risk penalizing unrealized gains. Senator Todd Young (R-IN) has echoed these concerns, calling for a review of the policy to prevent unfair burdens on investors. The letter also requests a $600 de minimis threshold for taxable crypto transactions, aligning with a proposal from Wyoming Senator Cynthia Lummis. The IRS, however, has taken a firm stance, finalizing digital-asset reporting rules that require centralized exchanges and wallet providers to report transactions starting in 2025. These rules, part of a broader effort to close tax gaps, will expand oversight to offshore platforms through a pending White House review.

The coalition also called for clearer rules to support decentralized finance (DeFi) and token creation, warning that regulatory gaps expose developers and users to legal risks. The letter urges the SEC and CFTC to issue exemptive relief for DeFi protocols and calls for the DOJ to avoid prosecuting developers for building decentralized applications. This plea follows the Tornado Cash case, where developer Roman Storm was convicted of operating an unlicensed money-transmitting business. While the DOJ recently clarified that "writing code is not a crime," the industry seeks stronger protections to ensure innovation isn't stifled by overreach.

The letter stresses the need for coordinated action among federal agencies. The President's Working Group Report on Digital Assets, released in July 2025, outlined a roadmap for crypto regulation, but the industry argues that implementation has lagged. The coalition urged the SEC's Crypto Task Force to issue interim guidance, emphasizing that conflicting agency rules could undermine U.S. competitiveness. This urgency is compounded by global developments, as the IRS moves to expand its surveillance of offshore crypto activity through third-party reporting requirements.

Recent appointments, such as Michael Selig's nomination to lead the CFTC, signal a shift toward crypto expertise in regulatory leadership. However, challenges persist. The IRS's new reporting framework, while intended to standardize compliance, has drawn criticism for placing heavy burdens on platforms. Meanwhile, the White House's review of offshore data access rules aims to align U.S. practices with international standards but risks complicating compliance for decentralized systems.

The crypto industry's push for clarity underscores a broader debate over balancing innovation with oversight. With the U.S. aiming to become the "crypto capital of the world," as outlined in Executive Order 14178, the outcome of these efforts will shape the sector's trajectory in the coming years.