Michaela
U.S. lawmakers have unveiled a discussion draft proposing tax breaks for small stablecoin transactions, aiming to reduce the tax burden on everyday crypto users and allow deferred taxation on staking and mining rewards.
Key Points
- Proposed tax breaks exempt small stablecoin payments (up to $200) from capital gains reporting.
- Staking and mining rewards could be deferred for up to five years instead of being taxed immediately.
- Safeguards include price-range limits, exclusion of brokers/dealers, and Treasury oversight to prevent misuse.
The proposal, introduced by Representatives Max Miller of Ohio and Steven Horsford of Nevada, aims to amend the Internal Revenue Code to account for the increasing use of digital assets in everyday payments. The draft specifically seeks to remove capital gains reporting requirements for low-value transactions made with regulated stablecoins.
The draft legislation would exempt users from reporting gains or losses on stablecoin transactions up to $200, as long as the coins are issued by a permitted GENIUS Act-compliant provider, pegged to the U.S. dollar, and maintain a stable value near $1.
The bill includes safeguards to prevent misuse, specifying that the exemption would not apply if a stablecoin strays beyond a narrow price range, and it excludes brokers and dealers. Additionally, the U.S. Treasury would also maintain authority to implement anti-abuse measures and reporting requirements.
Related: Trump Vows 1,600 New Power Plants to Slash US Electricity Costs Fast
Furthermore, the proposal tackles ongoing issues with “phantom income” from crypto staking and mining, allowing taxpayers to defer income recognition on these rewards for up to five years instead of facing immediate taxation. The measure is designed as a compromise between taxing upon receipt and deferring until the assets are ultimately sold or used.
The draft further proposes extending current securities lending tax rules to specific digital asset lending activities, applying wash sale regulations to actively traded crypto, and permitting traders and dealers to choose mark-to-market accounting for their digital assets.
Momentum on stablecoin regulation is building as the U.S. Federal Deposit Insurance Corporation (FDIC) last week approved a notice of proposed rulemaking and opened the plan for public comment. FDIC counsel Nicholas Simons noted that applications must describe intended activities, provide details on subsidiary ownership and control, and include an engagement letter from a registered public accounting firm.
Related: Global Liquidity Split: Yen Carry Trade Risks Rise as BoJ Eyes New Hike vs BoE Cut
The FDIC’s proposed rule marks a key move toward incorporating stablecoins into the regulated banking framework, providing guidance and clarity for financial institutions and innovators exploring digital dollar-backed tokens.
If passed, the proposed tax breaks for small stablecoin payments could make everyday crypto use more practical and appealing, lowering friction for casual transactions and encouraging wider adoption. By easing the reporting burden on minor transfers, lawmakers aim to make digital payments feel as seamless as using cash or a credit card, signaling a more user-friendly future for crypto in daily life.
Frequently Asked Questions
MICHAELA
Michaela is a news writer focused on cryptocurrency and blockchain topics. She prioritizes rigorous research and accuracy to uncover interesting angles and ensure engaging reporting. A lifelong book lover, she applies her passion for reading to deeply explore the constantly evolving crypto world.
