US bill proposes tax safe harbor for certain stablecoin transactions

Two bipartisan lawmakers in the U.S. House of Representatives have released a discussion draft that would establish a limited tax safe harbor for stablecoin payments, marking one of the most concrete attempts yet to align cryptocurrency taxation with everyday consumer use.

The proposal, called the Digital Asset PARITY Act, was introduced by Rep. Max Miller, a Republican from Ohio, and Rep. Steven Horsford, a Democrat from Nevada.

Both serve on the powerful House Ways and Means Committee, which oversees tax legislation, according to a report published Sunday by Bloomberg.

US bill would exempt small, stable payments from capital gains tax

At its core, the bill would exempt certain small stablecoin transactions from capital gains tax. Under the proposal, purchases made with regulated, dollar-pegged stablecoins worth less than $200 would not trigger taxable events.

The aim is to remove the compliance burden associated with routine payments, where even minor price fluctuations can currently require users to calculate gains or losses.

Horsford argued the project aimed to provide clearer rules while preserving the integrity of the tax system.

To qualify, stablecoins must be issued by an issuer authorized under the GENIUS Act, be backed only by the U.S. dollar, and have traded within 1% of $1.00 for at least 95% of trading days in the past year.

Brokers and dealers would be excluded from the safe harbor, and the exemption would not apply to other cryptocurrencies such as Bitcoin or Ether.

Lawmakers also said they were still considering whether to introduce an annual cap to prevent the provision from being used to protect investment activities rather than consumer payments.

Beyond stablecoins, the project attempts to resolve one of the most controversial questions in cryptocurrency tax policy: when staking and mining rewards should be taxed.

Current IRS guidance treats awards as taxable income at the time they are received, a position that has drawn criticism from industry advocates and some Republican lawmakers.

On the other end of the spectrum, Sen. Cynthia Lummis insisted that taxes be deferred until the awards were sold.

The Miller-Horsford proposal takes a middle-of-the-road approach. Taxpayers would be allowed to choose a five-year deferral on staking and mining rewards.

At the end of this period, the awards would be taxed as ordinary income based on their fair market value. The draft describes the framework as a compromise between immediate taxation and full deferral until sale.

US bill extends securities tax rules to crypto, targets fictitious transactions

The bill also extends several securities tax rules to digital assets.

It would apply wash sale restrictions to cryptocurrencies, limit strategies designed to lock in gains while delaying taxes, and expand securities lending treatment to qualifying crypto loans involving fungible liquid assets. NFTs and illiquid tokens would be excluded.

Additional provisions would allow professional traders to use mark-to-market accounting and relax valuation requirements for charitable donations of large-cap digital assets.

Passive protocol-level staking by investment funds would also be clarified as not constituting a transaction or business.

The stable safe harbor would take effect for tax years beginning after Dec. 31, 2025. Miller said he believes the broader legislation could advance before August 2026.

The US House draft proposes a tax safe harbor for certain stablecoin transactions. It appeared first on Cryptonews.

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