“The entire premise of this simply makes no sense and would kill cryptocurrency.”

I feel like this is more of a “the tighter you squeeze the more escape your grasp” situation. Crypto is so far ahead of government the best it can really hope for is to slow it’s decent in obsolescence.

Also, if the government wants to tax tomatoes I've grown but may rot before I sell won't they have to give me a tax credit for the negative return?

In this case one could wait until prices crash, claim the asset is no longer viable and get a write off.