Regulatory Developments Impacting Cryptocurrency Landscape in 2023

Arizona state Senator Wendy Rogers has proposed legislation to exempt virtual currency from taxation, aiming to change state laws on digital assets. Specifically, Senate Bill 1044 seeks to amend state statutes to prevent counties, cities, and towns from taxing blockchain nodes, while Senate Bill 1045 would ban local authorities from imposing fees on blockchain activities.

Additionally, a constitutional amendment, SCR 1003, would clarify that virtual currency is excluded from property taxes. However, the crypto tax bill and resolution would require voter approval in the November 2026 general election.

At the federal level, the industry faces uncertainty following the retirement announcement of Senator Cynthia Lummis, a key ally who has been instrumental in advancing crypto legislation. Lummis, chair of the Senate Banking Committee's crypto subpanel, expressed her decision not to seek reelection due to the challenges of the current Congress.

Her departure raises concerns as she has played a pivotal role in negotiations for broader cryptocurrency regulation. Meanwhile, President Trump's AI and crypto czar, David Sacks, has noted the emergence of a strong regulatory team with the confirmation of Michael Selig as chair of the Commodity Futures Trading Commission.

Selig's leadership is expected to lead to clearer regulatory guidelines, particularly as Congress prepares to finalize a market structure bill that would enhance the CFTC's authority over digital assets.