US lawmakers have released a discussion draft that could significantly reduce the tax burden for everyday crypto users, with a strong focus on stablecoin usage and staking rewards. The proposal aims to update the US tax code to better reflect how digital assets are used in daily payments and network participation.
The draft was introduced by Representatives Max Miller of Ohio and Steven Horsford of Nevada. It proposes targeted amendments to the Internal Revenue Code to address what lawmakers describe as unintended tax friction for consumers using stablecoin-based payments.
Stablecoin tax exemption for small payments
At the core of the proposal is a de minimis tax exemption for stablecoin transactions. Under the draft, individuals would not be required to recognize capital gains or losses on stablecoin payments of up to $200 per transaction.
The exemption would apply only to regulated payment stablecoins that meet strict criteria. To qualify, a stablecoin must be issued by a permitted issuer under the proposed GENIUS Act, be pegged to the US dollar, and trade within a narrow range around its $1 value. If a stablecoin deviates materially from that range, the exemption would not apply.
The draft explicitly excludes brokers, dealers, and other professional market participants from benefiting from the exemption. According to the text, the goal is to eliminate low-value gain recognition arising from routine consumer use of stablecoin payments, not to create tax advantages for trading activity.
The Treasury Department would retain authority to issue anti-abuse rules and reporting requirements, giving regulators flexibility to address attempts to exploit the exemption.
Tax deferral for staking and mining rewards
The proposal also addresses one of the most debated tax issues in crypto, the treatment of staking and mining rewards. Currently, rewards are generally taxed as ordinary income at the time they are received, even if the taxpayer has not sold or converted them. Critics often describe this as phantom income.
Under the draft, taxpayers could elect to defer income recognition on staking or mining rewards for up to five years. This would allow users to delay taxation until a later point, rather than being taxed immediately upon receipt.
The draft describes this approach as a compromise between immediate taxation upon control and full deferral until disposition. Lawmakers argue it better reflects the economic reality of how crypto networks operate while maintaining tax compliance.
Beyond staking, the proposal would extend securities lending tax treatment to certain digital asset lending arrangements. It would also apply wash sale rules to actively traded crypto assets and allow traders and dealers to elect mark-to-market accounting for digital assets.
Industry pushes back on stablecoin reward restrictions
The discussion draft follows growing tension around proposed restrictions on stablecoin rewards. Last week, the Blockchain Association sent a letter to the US Senate Banking Committee opposing efforts to expand limits on stablecoin rewards beyond issuers.
The letter was signed by more than 125 crypto companies and industry groups. It argued that restricting rewards on third-party platforms would stifle innovation and push market power toward large incumbents. The association compared stablecoin rewards to incentives offered by banks and credit card companies, warning that unequal treatment could undermine competition in digital payments.
If advanced, the Miller and Horsford proposal could mark a shift toward clearer and more practical tax rules for stablecoin users, particularly as lawmakers debate the broader framework for digital asset regulation in the United States.
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