"Crypto Week" proceeded in the House after all, following a standoff on the rule vote for consideration of cryptocurrency bills on Wednesday. House leaders kept the vote on a rule governing debate over three crypto bills open for a record-breaking nine-plus hours as they negotiated with conservative members who wanted to merge the CLARITY Act (H.R. 3633), which establishes a regulatory market structure for digital assets, with H.R. 1919, prohibiting the Federal Reserve System from studying or issuing a central bank digital currency (CBDC). The controversy ended when leaders agreed to add the CBDC provision to the must-pass National Defense Authorization Act (NDAA), and votes on all three bills followed on Thursday.

By a vote of 308-122 (including 102 Democrats), the House on Thursday (July 17) passed the GENIUS Act, a landmark Senate bill (S. 1582) regulating a type of cryptocurrency called stablecoins, which are designed to match the value of another stable asset such as the U.S. dollar. The coins are often used to facilitate trades of other, more volatile digital assets such as Bitcoin. The House also passed, 294-134 (including 78 Democrats), the CLARITY Act crypto market structure bill and finished with the anti-CBDC bill, which passed on a largely party-line vote. President Trump is expected to sign the GENIUS Act today, while House backers hope that the House vote will propel the Senate to take up the CLARITY Act.

Meanwhile, at the July 16 House Ways and Means Oversight Subcommittee hearing, "Making America the Crypto Capital of the World: Ensuring Digital Asset Policy Built for the 21st Century," there was consensus that more rules on the tax treatment of cryptocurrency are needed and members from both parties — Republican Max Miller from Ohio and Democrat Steven Horsford from Nevada — said they are interested in taking the lead on new legislation as Ways & Means to determines how crypto fits into the tax system.

There were two main issues that were discussed at the hearing:

• Digital assets are treated as property, any transfer or exchange can trigger taxable income, and the industry is pushing for a de minimis rule to exempt transactions under a threshold from taxation and reporting requirements because even buying a cup of coffee requires calculation and reporting of gain or loss, and that discourages the use of digital assets as a medium of exchange; and
• Staking, or the validation of transactions and issuing of rewards that currently must be included in income when the taxpayer gains control and that the industry wants changed to be treated like other created property — taxed at the time of sale, not at the time of creation.

These issues are addressed in the June 30 bill (S. 2207) introduced by Senator Cynthia Lummis (R-WY) — who has been active on the crypto issue generally — that would set a $300 de minimis threshold and $5,000 yearly total cap, provide that digital asset lending agreements are generally not taxable events, revise the wash sale rules as they pertain to digital assets, provide that mining and staking income is not recognized until sale/disposition of produced assets, and exempt charitable contributions from appraisal requirements.

Rep. Miller's stated plans for a bill follow a similar issue set as the Lummis bill: de minimis, staking, wash sale rules, mark-to-market elections, charitable contributions, lending, and retirement plan issues. A WCEY Alert is available here.

Rescissions package — Late Thursday night (July 17), the House voted 216-213 to clear a $9 billion package of rescissions to previously appropriated funds (H.R. 4). Two Republicans joined all Democrats in opposing the bill: Reps. Brian Fitzpatrick (PA) and Mike Turner (OH). The New York Times said it was the first rescissions package to be approved by Congress since 1999, under President Clinton. The bill included about $8 billion in cuts to foreign aid programs managed by USAID and the State Department, in areas such as health, development, disaster relief, food/nutrition and democracy programs. Public broadcasting also took a $1.1 billion hit, as the bill rescinded two years of funding for the Corporation for Public Broadcasting (CPB), including funding for PBS and NPR.

Early the morning of July 17 after yet another late-night vote-a-rama on amendments, the Senate approved an amended version of the bill by a vote of 51-48. Two Republican senators — Susan Collins (ME) and Lisa Murkowski (AK) — joined all Democrats present in voting against it. Senate Republicans agreed to drop $400 million in the original House bill's cuts to PEPFAR (the President's Emergency Plan for AIDS Relief), along with some other changes, requiring the House to vote again.

Tax — Since enactment of the "One Big, Beautiful Bill Act" (Public Law No. 119-21), there has been speculation about a potential follow-on bill addressing outstanding tax and health issues, Medicaid and other changes cut out of the just-enacted bill to meet reconciliation rules, OBBBA technical corrections, tax extenders like extension of the Work Opportunity Tax Credit (WOTC), and possible retirement items.

During a July 16 EY event, Curtis Beaulieu, a senior policy adviser to Speaker Mike Johnson (R-LA), said there is some interest in a SECURE 3.0 bill and some retirement items that could be included were intentionally left out of the OBBBA. (SECURE 3.0 refers to a potential third retirement policy package, following enactment of two prior SECURE bills at the end of 2019 and 2022, respectively.) Beaulieu also said a future bill could increase the current 20% IRC Section 199A pass-through deduction, which was proposed by the House in the original OBBBA bill to be 23% but was kept at 20% in the final bill.

Global tax — A Belgian court July 17 ruled that plaintiffs including the American Free Enterprise Chamber of Commerce had standing to bring a case challenging the validity of the UTPR under EU law and referred the case to the European Court of Justice. The Daily Tax Report said, "The Belgian Constitutional Court found that the application of Belgium's undertaxed profits rule, including its calculation and allocation, are imposed by the EU's global minimum tax directive." The court doesn't have jurisdiction to rule on a directive, so referred the case to the Court of Justice of the European Union.

A press release said, "AmFree Chamber challenged the Belgian legislation implementing the UTPR provisions, arguing these provisions infringe upon fundamental rights protected by the Belgian Constitution and primary EU law, including the right to property, the freedom to conduct a business, and the principles of equality, non-discrimination, legality, and fiscal territoriality."

"The EU's Court of Justice could effectively kill the UTPR within the union if it backs the plaintiffs in the lawsuit," Morning Tax reported today. "But that court's ruling could take up to 18 months, as AmFree noted in its release — which seemingly adds another layer of uncertainty to Pillar 2's path forward in Europe."

An EY Tax Alert, "Changes to GILTI, FDII and BEAT, among others, included in final reconciliation legislation, but not previously proposed remedy for 'unfair foreign taxes," is available here.

Today, July 18 at 12:00 p.m. ET is the EY Webcast, "Tax in a time of transition: legislative, economic, regulatory and IRS developments."