U.S. Cryptocurrency Tax Reform Imminent, Two Senators Push for Tax-Free Stablecoin Transactions

U.S. cryptocurrency tax policies are facing a significant turning point. The bipartisan House members jointly drafted the “Digital Asset PARITY Act,” aiming to address longstanding tax issues in the industry, especially by creating a “tax-exempt safe harbor” for consumers using stablecoins for everyday transactions, while also providing more user-friendly reporting options for staking and mining income. This reform is expected to improve the cryptocurrency usage environment in the United States.

Why Have Micro-Payments Become a Pain Point?

For a long time, everyday transactions like buying a coffee with cryptocurrency have been considered “property disposition” in the U.S. This means that every tiny transaction must be subject to capital gains tax—even if the amount is only a few dollars. This cumbersome tax treatment fundamentally hampers the application prospects of cryptocurrencies in payments and has become the industry’s biggest obstacle to development.

Stablecoins “Tax-Free Payments” Focus, Transactions Under $200 Do Not Require Capital Gains Calculation

The core innovation of the “Digital Asset PARITY Act” is establishing a dedicated tax-exempt framework for stablecoin payments. Any payment made with regulated, USD 1:1 pegged stablecoins, with a single transaction amount under $200, will be completely exempt from capital gains tax.

The key to this safe harbor design is that it explicitly targets “payment purposes” rather than investment activities. In other words, buying things with stablecoins is tax-free, but activities used for investing or trading are not covered by the exemption. The bill also specifically states that volatile assets like Bitcoin and Ethereum are not eligible for this benefit, and brokers and traders are excluded as well.

Stablecoins that meet the exemption criteria must satisfy strict standards: issued by institutions authorized under the “GENIUS Act,” pegged solely to the USD, and maintaining a price fluctuation within 1% of $1 on at least 95% of trading days over the past 12 months. Legislators are currently evaluating whether to set an annual transaction cap to prevent abuse of this policy for tax evasion.

Mining and Staking Rewards Can Be Deferred for Reporting, Details Align More with Traditional Finance

Another long-standing industry concern is the timing of taxation on mining and staking rewards. According to past IRS guidance, these rewards are taxed as income at the moment of “receipt,” which has led to widespread backlash because investors face hefty tax bills before the funds even hit their accounts.

The “Digital Asset PARITY Act” proposes a compromise: taxpayers can delay reporting for up to 5 years, and after that, include the fair market value at that time as ordinary income. This measure significantly alleviates cash flow pressures.

At the same time, the bill adopts stricter rules at the transaction level to close tax loopholes, including:

Prohibiting “wash sales”—cryptocurrency investors cannot artificially inflate costs or offset profits through short-term buying and selling of loss assets, aligning with stock market regulations.

Presumption of sale rules—to prevent investors from locking in gains but deliberately delaying tax payments.

Extension of securities lending rules—if the digital assets are liquid and fungible, lending them does not constitute a taxable event.

Additionally, professional traders may voluntarily choose to recognize gains and losses on a daily mark-to-market basis; for digital assets with a market cap over $10 billion, donations to charitable organizations can be exempt from the qualified appraisal requirement. The bill also clarifies that “passive, protocol-level staking” conducted by investment funds should not be considered a trade or business activity, avoiding additional tax burdens.

When Will the U.S. Tax Exemption Framework Take Effect? Recent Developments

The bill was jointly introduced by Republican Ohio Congressman Max Miller and Democratic Nevada Congressman Steven Horsford, both members of the House Ways and Means Committee. Bipartisan cooperation helps advance the legislation.

According to the plan, the stablecoin safe harbor will apply to tax years after December 31, 2025. Max Miller expects the overall bill to potentially pass before August 2026. As the U.S. tax exemption framework gradually takes shape, the prospects for cryptocurrency in everyday payments may usher in a new turning point.