US Bill Proposes Stablecoin Tax Relief, Staking Deferral
US Bill Offers Tax Relief for Stablecoin Use and Staking Income
American legislators have put forward a legislative discussion draft designed to reduce the tax obligations faced by regular cryptocurrency users. This initiative includes exemptions for minor stablecoin transactions from capital gains taxes along with a fresh mechanism for deferring taxes on rewards earned through staking and mining activities.
The proposal comes from Representatives Max Miller from Ohio and Steven Horsford from Nevada. It aims to update the Internal Revenue Code to better accommodate the increasing adoption of digital currencies for everyday payments. According to the draft, the goal is to remove the requirement for recognizing low-value gains that occur during routine consumer payments using regulated payment stablecoins.
Specifically, the draft stipulates that individuals would not need to report gains or losses on stablecoin transactions valued at $200 or less. This exemption applies only to stablecoins issued by approved entities as defined under the GENIUS Act, those pegged to the US dollar, and which maintain a stable trading value closely around the $1 mark.
To ensure the provision is not misused, several protective measures are incorporated. The tax break does not extend to stablecoins that deviate from their narrow price stability range. Additionally, brokers and dealers are ineligible for this exemption. The Treasury Department is also empowered to establish rules aimed at preventing abuse and to mandate appropriate reporting obligations.
US Legislation Defers Taxation on Cryptocurrency Staking Rewards
In addition to addressing payment-related issues, the proposal tackles persistent problems associated with ‘phantom income’ generated from staking and mining operations. Under this plan, taxpayers gain the option to postpone the recognition of income from staking or mining rewards for as long as five years, avoiding immediate taxation upon receipt.
The draft document explains: “This provision represents a balanced compromise between taxing income immediately upon gaining control and dominion over it, and allowing complete deferral until the assets are sold or disposed of.”
Furthermore, the legislation would apply the current tax rules for securities lending to specific types of digital asset lending. It introduces wash sale regulations applicable to frequently traded cryptocurrencies and permits traders and dealers to opt into mark-to-market accounting methods for their digital asset holdings.
Crypto Organizations Push Back Against Stablecoin Reward Restrictions
Just last week, the Blockchain Association delivered a letter to the US Senate Banking Committee, endorsed by over 125 companies and groups within the cryptocurrency sector. This correspondence opposes any attempts to broaden the prohibitions on stablecoin yield programs to include third-party platforms.
The organizations contend that such expansions under the GENIUS Act, beyond just stablecoin issuers, would stifle innovation and consolidate market power among established major players. They draw parallels between cryptocurrency reward mechanisms and commonplace incentives provided by traditional banks and credit card issuers, cautioning that prohibiting equivalent features for stablecoins would erode competitive fairness in the market.
