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Duke Law Journal Online
VOLUME 72 OCTOBER 2022
CRYPTOCURRENCY, LEGIBILITY, AND
TAXATION
AMANDA PARSONSt
ABSTRACT
In Jarrett v. United States, a taxpayer in Tennessee is arguing that
staking cryptocurrency did not result in him earning income under
federal income tax law. This case illustrates the fundamental challenge that
cryptocurrency and blockchain technology present for tax law. Wealth
creation in the crypto space is not readily legible to the state. This absence
of legibility threatens tax law 's reliance on placing economic activities into
categories to determine how they should be taxed. Furthermore, this case
highlights the harms Congress and Treasury are risking by not taking
action on cryptocurrency taxation. The uncertainty and lack of guidance
on the appropriate taxation of cryptocurrency is opening the door for a
critical juncture in tax law to be decided via strategic litigation. This
threatens a jurisprudential evasion of the democratic and administrative
process in a high-stakes moment for tax law.
INTRODUCTION
The amount at issue is only $3,793,1 but a case pending in the Middle
District of Tennessee comes at a crucial juncture for tax law. The United
States must now decide how it should tax an emerging technology that is
associated with billions of dollars' worth of transactions each day2 and that
many claim will revolutionize the global economy.3 As this Essay will
explain, answering this question requires grappling with whether our current
Copyright © 2022 Amanda Parsons.
T Associate Professor, University of Colorado Law School. Thanks to the participants in the
Columbia Academic Fellows' Workshop and to the staff of the Duke Law Journal Online for helpful
comments and guidance.
1. Complaint at 7, Jarrett v. United States, No. 3:21-cv-00419 (M.D. Tenn., May 26, 2021)
(identifying the amount at issue as $3,793 plus statutory interest).
2. See NASDAQ DATA LINK, BITCOIN ESTIMATED TRANSACTION VOLUME USD, https://data.nas
daq.com/data/BCHAIN/ETRVU-bitcoin-estimated-transaction-volume-usd [https://perma.cc/7FQR-EMEN]
(showing transaction volumes for Bitcoin alone to be in the billions of dollars on average trading days).
3. See, e.g., ESWAR S. PRASAD, THE FUTURE OF MONEY 149 (2021) ([T]he revolution set off by
Bitcoin will eventually touch everyone, changing financial systems and, at one level, certain key aspects
of society as well.); RHIAN LEWIS, THE CRYPTOCURRENCY REVOLUTION 1-2 (2020) (describing virtual
currencies as a revolution in payments that will change[] everything about the way we live and transact
with each other).](ViewImageLocal?handle=hein.journals/duljo72&div=1&collection=&method=preview&ext=.png&size=3)
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