US House Draft Proposes Tax Safe Harbor for Some Stablecoin Transactions
A recent discussion draft released by two bipartisan members of the US House of Representatives aims to create a limited tax safe harbor for stablecoin payments, marking one of the most concrete attempts to adapt cryptocurrency taxation to everyday consumer use. The proposed bill, called the Digital Asset PARITY Act, was introduced by Rep. Max Miller, a Republican from Ohio, and Rep. Steven Horsford, a Democrat from Nevada, who both sit on the powerful House Ways and Means Committee, which oversees the tax code.
The proposal seeks to exempt small stablecoin payments under $200 from capital gains tax, as well as allow for a five-year deferral of taxes on staking and mining rewards. This move is aimed at consumer use, rather than crypto investments or trading activities. According to a report from Bloomberg, the bill would provide clearer rules while preserving the integrity of the tax system.
Key Provisions of the Digital Asset PARITY Act
The bill would exempt certain small stablecoin transactions from capital gains tax, with purchases with regulated dollar-pegged stablecoins valued at less than $200 not triggering taxable events. To qualify, stablecoins must be issued by a GENIUS Act-approved issuer, be backed exclusively by the U.S. dollar, and have traded within 1% of $1.00 on at least 95% of trading days in the past year. Brokers and dealers would be exempt from the safe harbor, and the exemption would not apply to other cryptocurrencies such as Bitcoin or Ether.
Lawmakers are still considering whether to introduce an annual cap to prevent the provision from being used to shield investment activities rather than consumer payments. The draft also seeks to resolve one of the most controversial questions in cryptocurrency tax policy: when staking and mining rewards should be taxed. Current IRS guidance treats rewards as taxable income the moment they are received, a position that has been criticized by industry officials and some Republican lawmakers.
Extending Securities Tax Regulations to Cryptocurrencies
The bill would extend several securities tax provisions to digital assets, including applying wash-sale restrictions to cryptocurrencies and restricting strategies that seek to lock in profits while delaying taxes. It would also expand securities lending treatment to qualifying crypto loans involving fungible, liquid assets, excluding NFTs and illiquid tokens. Additional provisions would allow professional traders to use mark-to-market accounting and relax valuation requirements for charitable donations of large-cap digital assets.
The stablecoin safe harbor would be effective for tax years beginning after December 31, 2025. Rep. Miller believes that the broader legislation could move forward before August 2026. The proposed bill is a significant step towards clarifying the tax treatment of cryptocurrencies and providing a more favorable environment for their use in everyday transactions.
For more information on the US House draft and its implications for the cryptocurrency industry, please visit https://cryptonews.com/news/us-house-draft-proposes-tax-safe-harbor-for-some-stablecoin-transactions/
