“Congress should establish crypto tax reforms that match the same common-sense approach Montana has already led with.”
April 15 is tomorrow, and thousands of Montanans who bought or used cryptocurrency last year are staring at a form they’ve never seen before: the 1099-DA. It is the IRS’s brand-new information return for digital asset transactions, and 2025 is the first year exchanges were required to issue them. For many Montanans, this is their first encounter with what the federal tax code actually demands of crypto users, and it has made taxes even less fun than usual.
Some are getting forms for transactions under a dollar. Others are getting forms that show gross proceeds but no cost basis, leaving them to figure out the math on their own. Tax preparers are turning clients away rather than wade through incomplete data. Coinbase alone has acknowledged the burden, noting that requiring 1099-DA forms for stablecoin transactions and small purchases like gas fees “creates a mountain of paperwork for zero tax revenue.” This system is a mess because Congress has not updated its tax code to account for the fact that digital assets have gone mainstream.
According to a 2025 survey by the National Cryptocurrency Association and Harris Poll, roughly 21 percent of American adults, about 55 million people, now own cryptocurrency. In Montana, that includes small business owners, construction workers, teachers, and retirees. Many of them did exactly what Montana’s own laws made possible, they held crypto, they staked it, they used it for a purchase. The federal tax code is punishing them for participating in a new and innovative industry that promotes financial freedom.
Montana has not been waiting for lawmakers in Washington to figure this out. Over the last few legislative sessions, our state leaders passed some of the most forward-thinking digital asset laws in the country. The Financial Freedom and Innovation Act (SB 265), signed into law in 2025, protects Montanans’ right to self-custody their crypto, bans central bank digital currency, explicitly protects staking, and created the nation’s first regulatory framework for network tokens. Montana also established a bipartisan Blockchain and Digital Innovation Task Force that is actively meeting and will report recommendations to the legislature by July 2026. Commissioner of Securities, James Brown has been building out regulatory infrastructure while cracking down on bad actors who target Montana consumers. These are real protections producing real confidence for Montanans in the digital economy, but every one of those activities now collides with a federal tax code that has not caught up.
Take staking. When someone stakes digital assets, they lock tokens into a blockchain network to help verify transactions and keep the system secure. Think of it like depositing collateral that helps the network run. In return, the network periodically creates small new tokens as a reward. Montana recognized this in SB 265, which explicitly protects staking and Montanans’ right to earn from their assets. But under federal tax rules, staking rewards are taxed as ordinary income the moment they appear in an account, even if the token’s value drops before it can be sold. A Montanan who receives a staking reward worth $100 in November owes tax on $100 even if that token is worth $5 by December. Montana’s law provided clarity for residents who wanted to stake. The IRS is punishing them for doing exactly that.
The same mismatch applies to everyday purchases. Under current law, every digital asset payment, no matter how small, is a taxable disposition of property. A Montanan who uses Bitcoin to buy a $50 dinner at Mackenzie River Pizza must identify which specific units were spent, calculate fractional cost basis to eight decimal places, and report the transaction on Form 8949. No other payment method requires this as it is totally impractical for anyone who isn’t a tax attorney.
The foreign currency rules already provide a de minimis threshold for small transactions under Section 988 of the tax code. Senator Lummis’s bill (S. 2207) proposes a $300 per-transaction threshold with a $5,000 annual cap. The Joint Committee on Taxation scored it as revenue-positive, meaning this fix actually raises money for the government while removing a senseless compliance burden from everyday Americans.
Senator Steve Daines sits on the Senate Finance Committee and has made crypto tax modernization a priority, warning that uncertainty in the tax code is “chilling innovation at home and displacing U.S. leadership abroad.” He is working alongside House and Senate colleagues to fix these glaring issues.
Daines announced in March that he will not seek re-election, which gives him roughly nine months to help get this important work across the finish line. Leaders in Washington would be wise to follow Senator Daines’ lead. They could start by right-sizing the 1099-DA reporting regime, fixing the phantom income trap for people who earn small amounts of crypto on the side, and creating a de minimis exemption for everyday transactions. Montana built the state-level framework. Congress should establish crypto tax reforms that match the same common-sense approach Montana has already led with.
Montanans who use digital assets for payments, savings, and network participation should not face compliance burdens that dwarf the tax they owe. It should not take a $500 tax software subscription to exercise it. Tax day is April 15. Montana proved you can protect consumers and welcome innovation at the same time. The federal tax code should reflect the same principle.
