In a striking development, the U.S. Internal Revenue Service’s digital assets division finds itself adrift yet again. Trish Walker, who recently stepped into the role of chief, has departed, marking the exit of another key figure amid a flurry of leadership changes. As of August 31, 2025, the IRS has not announced Walker’s successor, leaving a vacuum at a time when the agency faces an onslaught of new crypto tax filings.
Leadership Exodus
Walker’s departure adds to a growing list of high-profile exits from the IRS’s crypto team, with two other officials having already left for the private sector. This leadership void emerges just as the agency braces for a deluge of crypto-related tax documents, including the newly introduced 1099-DA form. Millions of crypto users are expected to file this form for the first time, ushering in a wave of administrative challenges that could overwhelm an already beleaguered IRS.
According to James Li, a tax analyst at CryptoTax Solutions, “The IRS is in a precarious position. The complexity of crypto taxation is evolving faster than the agency’s ability to handle it, especially with its current resource constraints.”
An Uncertain Landscape
The IRS’s predicament is compounded by budget cuts and staffing reductions, exacerbated by a federal-wide downsizing initiative spearheaded by Elon Musk. Over 20,000 employees have been trimmed from the agency’s roster, including two from the crypto division. This contraction raises concerns about the IRS’s capacity to manage the burgeoning crypto tax workload effectively.
Crypto taxation has long been a quagmire for U.S. investors, with previous ambiguities leading to underreporting and confusion. The new 1099-DA form aims to streamline reporting, but its introduction is expected to catch many off guard. As crypto accountant Sarah Nguyen notes, “Many investors are still grappling with what they owe and how to report it. Without clear guidance from the IRS, this tax season could be chaotic.”
Market and Policy Implications
The U.S. crypto industry has been eagerly anticipating more favorable tax provisions from Congress. However, recent legislative inertia means existing policies remain in force. Meanwhile, the IRS’s current upheaval could delay any progress in tax policy reform, leaving taxpayers in limbo. For a deeper dive into the regulatory implications, see our coverage of the SEC’s latest guidance.
Further complicating matters, the Commodity Futures Trading Commission (CFTC), a key regulatory body for crypto, is facing its own leadership crisis. The commission is on track to shrink to a single member, potentially stalling its oversight capabilities just as Congress is poised to enact significant digital assets legislation. This follows the CFTC’s recent efforts to enhance its surveillance capabilities, as detailed in our article on the CFTC’s use of the Nasdaq platform.
Looking Ahead
As Congress prepares to reconvene in September, the crypto community is watching closely. The industry’s lobbying efforts have intensified, with a coalition of crypto advocates recently warning the Senate against passing a market structure bill that threatens software developers with legal liabilities.
However, not all crypto-related news is grim. The U.S. Department of Commerce has begun pushing economic data onto blockchains as a proof of concept, signaling a willingness to experiment with new technologies.
The IRS’s leadership turmoil and the impending tidal wave of crypto tax filings raise significant questions about the agency’s readiness for the coming tax season. Will the IRS manage to stabilize its crypto division in time? And how might this uncertainty impact the broader crypto market? These are the questions that industry insiders and investors alike will be pondering in the coming months.
Source
This article is based on: State of Crypto: Unsettled U.S. Crypto Tax Scene
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
