Navigating the new crypto tax landscape

Walter Hellerstein, Distinguished Research Professor Emeritus at the University of Georgia Law School, and Andrew Appleby, associate professor at the University of Tennessee, explore the state tax implications of federal income tax guidance on cryptoassets. The Working Group on Digital Asset Markets released a 160-page document titled “Strengthening American Leadership in Digital Financial Technology,” which includes a chapter on taxation. Although it lacks explicit references to state taxation, the authors argue that the federal guidance will likely influence state tax practices. They note: “States will inevitably look to federal guidance as they develop their own approaches to taxing cryptoasset transactions.” The article discusses definitional issues, current guidance, and priority tax issues, emphasizing the need for states to adapt their tax frameworks in response to evolving federal regulations. As the landscape of cryptoasset taxation continues to change, both federal and state authorities must monitor developments closely.