US lawmakers have introduced a discussion draft that would scale back the tax burden on on a regular basis crypto users by exempting small stablecoin transactions from capital gains taxes and offering a brand new deferral option for staking and mining rewards.
The proposal, introduced by Representatives Max Miller of Ohio and Steven Horsford of Nevada, goals to amend the Internal Revenue Code to reflect the increasing use of digital assets in payments. The aim of the draft is to “eliminate the popularity of low-value profits arising from the routine use of stablecoins for regulated payments by consumers,” based on the draft.
Under the bill, users wouldn’t be required to acknowledge gains or losses on stablecoin transactions of as much as $200, provided the asset is issued by a GENIUS Act-approved issuer, is pegged to the U.S. dollar, and maintains a narrow trading band around $1.
The bill incorporates safeguards to stop misuse. The exemption wouldn’t apply if a stablecoin trades outside a narrow price range, and brokers or dealers could be excluded from the profit. The Treasury Department would proceed to have the authority to issue anti-abuse regulations and reporting requirements.
The bill explains the explanations for tax relief. Source: House
US bill defers taxes on crypto staking rewards
Beyond payments, the proposal addresses long-standing concerns about “phantom income” from staking and mining. Taxpayers could elect to defer income recognition from staking or mining awards for as much as five years, reasonably than being taxed immediately upon receipt.
“This provision is meant to reflect a mandatory compromise between the immediate taxation of dominion and control and an entire deferral pending disposition,” the draft states.
The draft also extends the prevailing tax treatment of securities lending to certain digital asset lending arrangements, applies wash-sale rules to actively traded crypto assets, and allows traders and dealers to elect to mark-to-market accounting for digital assets.
Crypto groups are calling on the Senate to reconsider ban on stablecoin rewards
Last week, the Blockchain Association sent a letter to the U.S. Senate Banking Committee signed by greater than 125 crypto corporations and industry groups opposing efforts to expand restrictions on stablecoin rewards on third-party platforms.
The group argued that expanding the boundaries of the GENIUS Act beyond stablecoin issuers would stifle innovation and increase market concentration in favor of enormous incumbents. The letter compared crypto rewards to incentives commonly offered by banks and bank card corporations and warned that banning similar features for stablecoins would undermine fair competition.
