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US lawmakers propose crypto tax reform bill on stablecoins
US Representatives Max Miller and Steven Horsford have drafted a bipartisan bill to update the tax treatment of cryptocurrency, focusing on stablecoin transactions and rewards from blockchain verification.
Miller, a Republican from Ohio, and Horsford, a Democrat from Nevada, both serve on the House Ways and Means Committee.
Their proposal would exempt capital gains taxes on transactions involving regulated, dollar-pegged stablecoins under US$200, but does not extend this to other cryptocurrency.
The draft also suggests letting taxpayers defer taxes on staking and mining rewards for up to five years, after which rewards would be taxed as income at fair market value.
The bill seeks to align digital asset taxation with existing rules for securities and commodities, including extending mark-to-market accounting and capital gains tax exemptions for foreign investors.
It also proposes applying wash sale rules to digital assets to prevent tax avoidance through certain types of trades.
🔗 Source: Bloomberg
🧠 Food for thought
Implications, context, and why it matters.
Stablecoin exemption targets everyday transactions but definition remains critical
- Lawmakers propose a capital gains tax break for purchases under $200 made with qualifying, regulated dollar-pegged stablecoins (cryptocurrencies designed to maintain a stable value by being tied to the U.S. dollar). This de minimis (small-amount) rule would remove tax chores that now deter routine crypto payments, since even tiny buys require calculations under current law 1.
- Public materials do not list which assets count as regulated, dollar-pegged stablecoins. The discussion draft and later rules will set that list, and the break applies only to those coins, not to all crypto 1.
- The draft tackles phantom income (tax owed on rewards received on paper but not readily spendable) from illiquid staking or mining. Taxpayers could defer tax for up to five years, then pay income tax at fair market value, which would ease paperwork for validators (entities that secure proof-of-stake networks) and miners (entities that process transactions on proof-of-work networks) 1.
Potential impact on payments if a sub-$200 stablecoin de minimis exemption is enacted
- If enacted the rule lets payment firms such as PayPal add more checkout choices for purchases under $200. PayPal already supports PYUSD (PayPal’s U.S. dollar-pegged stablecoin) 2.
- Point-of-sale and checkout software firms can compete by adding compliant stablecoin rails (payment pathways) that auto-track per-transaction limits and cut tax chores for buyers 1.
- Cutting tax hurdles on small spends can make checkout smoother for crypto, which may widen merchant use.
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