Key Insights
- A U.S. crypto tax bill was proposed to offer tax relief for eligible stablecoin payments.
- The legislation would apply wash-sale restrictions to traded digital assets.
- Network transaction fees amounting to $10 or less could qualify for tax relief.
On Sept. 30, U.S. Senator Steve Daines put forward a crypto tax bill in the Senate. The proposed measure would exempt qualifying stablecoin purchases from the recognition of gains or losses while expanding established tax principles to cover other digital asset transactions.
Under current federal tax guidelines, the Internal Revenue Service categorizes digital assets as property. This classification necessitates the calculation of gains or losses whenever taxpayers spend cryptocurrency. Daines’ proposal aimed to introduce customized payment rules while maintaining anti-abuse regulations for trading activities.
U.S. Crypto Tax Bill Opens Stablecoin Payment Exemption
Entitled the Aligning Digital Assets with Principles of Taxation Act, the 56-page bill establishes an exemption for payment stablecoins. According to Section 2, taxpayers would not need to recognize any gain or loss on eligible stablecoin transactions. The Treasury department would be required to release a list of qualifying stablecoins at least once every three months.
Eligibility is restricted to qualified U.S. dollar stablecoins that have traded within 3% of $1. The Treasury would evaluate whether each token maintained that trading range over the preceding 12 months. Businesses such as traders, brokers, dealers, and similar entities would be excluded from the payment exemption.
Furthermore, the legislation eliminates broker information reporting requirements for qualifying stablecoin transactions. Taxpayers would still be required to maintain records that distinguish exempt purchases from other stablecoin activities. Should Congress pass the bill, these stablecoin tax regulations would take effect after Dec. 31, 2026.
Internal Revenue Service Notice 2014-21 classifies convertible virtual currency as property, meaning standard property rules apply when users sell, trade, or spend these assets. The proposed exemption would establish a more specific, narrow rule for eligible dollar-pegged stablecoins.
U.S. Crypto Tax Bill Adds Wash-Sale and Fee Rules
Section 7 proposes applying wash-sale restrictions to traded digital assets, with qualified U.S. dollar stablecoins exempted. Under specific conditions, the legislation also treats tokenized or bridged assets with economic equivalence as substantially identical. Exceptions are provided for certain validation rewards and mark-to-market positions.
Traditional wash-sale regulations typically limit loss deductions related to the repurchase of substantially identical covered assets. Adding traded digital assets to this framework would restrict the tax-loss strategies currently utilized across numerous crypto transactions.
Section 11 introduces distinct relief measures for eligible digital asset transaction costs, stating that no gain or loss will be recognized when covered transaction expenses total $10 or less. This category encompasses network fees, gas fees, commissions, transfer taxes, and comparable charges.
The fee exemption excludes traders, brokers, dealers, certain validation enterprises, and similar entities. Taxpayers who initiate more than 5,000 digital asset transactions during the previous taxable year are also excluded. This provision would apply to dispositions of covered assets occurring after Dec. 31, 2026.
Crypto Tax Rules Extend to Staking, Mining and Lending
The legislative proposal sets out sourcing rules for income generated from digital asset validation. For U.S. persons, qualifying validation income would generally be sourced domestically, whereas foreign persons would source such income internationally, subject to branch regulations.
In the context of mining, transaction fees and qualifying pool payments count as validation income, whereas compensation received for equipment-management or hosting services is excluded. The Treasury would be granted the authority to establish supplementary branch-attribution rules.
The bill broadens securities-lending tax treatments to cover qualifying digital asset loans and introduces mark-to-market elections for eligible digital asset traders and dealers. Additional sections deal with charitable contributions, investment trusts, constructive sales, and publicly traded partnerships.
Daines presented these concepts during a July 16 Senate Finance Committee hearing, arguing that familiar tax standards should govern digital assets when they behave like commodities or securities. He also advocated for specialized regulations addressing stablecoin payments, network fees, lending, staking, and validation processes.
House Vote Creates Separate Tax Track
The Senate legislation follows a separate digital asset tax initiative originating in the House. On Sept. 16, the House Ways and Means Committee advanced the Digital Asset Tax Certainty Act, voting 38-5 to report the measure favorably.
While the House bill similarly targets payments, wash sales, mining, staking, and mark-to-market accounting, the two chambers are advancing distinct bills featuring different wording. Daines’ Senate bill lists Tim Scott, Cynthia Lummis, and Bernie Moreno as co-sponsors.
During a June 3 Senate Finance Committee session with Daines, Treasury Secretary Scott Bessent pledged to collaborate with Congress on digital asset tax legislation.
As of Sept. 30, neither proposal had been signed into law. Official records reviewed did not indicate a scheduled Senate Finance Committee markup date. The next steps will depend on committee review or another announced action in the Senate.
This article is for informational purposes only and does not constitute tax, legal or financial advice. The Senate and House proposals have not become law.