Bipartisan Bill Targets Crypto Tax Relief For Staking And Stablecoins

Washington just threw crypto a lifeline—or at least, a very promising rope. A new bipartisan bill is slicing through the regulatory fog, aiming to untangle the tax knots around staking rewards and stablecoin transactions. This isn't just tweaking the code; it's a potential rewrite of the rulebook for everyday crypto users and builders.

The Staking Snarl Gets a Fix

Right now, earning crypto by staking feels like getting taxed on your paycheck before you even cash it. The bill proposes a simple, elegant fix: you only pay taxes when you sell or trade those rewards, not the moment they hit your wallet. It treats staking income like property—you're taxed on the gain, not the receipt. This could supercharge participation in proof-of-stake networks overnight, turning tax confusion into clear incentive.

Stablecoins: From Red Tape to Green Lights

The bill draws a bright line for stablecoins. Using a dollar-pegged coin to buy a coffee? That's not a taxable event anymore. The goal is to treat these transactions like using actual cash, cutting out the accounting nightmare of tracking micro-gains on every purchase. It's a move that could finally make stablecoins behave like the digital dollars they're meant to be, not a tax accountant's recurring nightmare.

Why This Bill Actually Has a Shot

This isn't fringe policy. The bipartisan backing signals a rare consensus that current tax rules are stifling, not guiding, innovation. Lawmakers are finally acknowledging that applying 20th-century tax code to 21st-century assets creates more problems than it solves. The push is about clarity and growth, not a free pass—a distinction that's winning allies across the aisle.

The bill now faces the real test: navigating committee debates, amendments, and the sheer inertia of Washington. But its mere existence marks a turning point. Regulatory uncertainty has long been crypto's heaviest anchor. This effort cuts it loose, aiming to replace fear of the IRS with a framework for building. Of course, in the world of high finance, any rule that makes something simpler is immediately suspected of making it too easy—probably by the same folks who think a 50-page tax return is a sign of sophistication.

TLDR

• Stablecoin transactions under $200 may become tax-exempt under the new House bill.
• Lawmakers propose a 5-year tax deferral on staking and mining rewards.
• The bill applies mark-to-market accounting to cryptocurrencies, similar to traditional securities.
• The proposal extends wash sale rules to crypto to prevent tax loss harvesting.

A Bipartisan proposal in the U.S. House of Representatives is reaching a new approach to taxing digital assets. The draft framework, developed by Representatives Max Miller (R-OH) and Steven Horsford (D-NV), aims to modernize cryptocurrency taxation and address long-standing concerns from investors and blockchain participants. The measure would create a tax safe harbor for certain stablecoin transactions and offer tax deferral options for staking rewards.

Safe Harbor for Stablecoin Transactions and Staking Rewards

The proposed legislation aims to exempt capital gains taxes on low-value transactions involving stablecoins. Under the draft, regulated, dollar-pegged stablecoin transfers of less than $200 WOULD not trigger a capital gains tax. This exemption would apply only to stablecoins and not to other forms of cryptocurrency.

Additionally, the bill introduces an optional five-year deferral of income tax for rewards earned through staking or mining. After five years, the rewards would be taxed as ordinary income based on their fair market value. 

This stands in contrast to current IRS guidance, which taxes staking rewards at the time of receipt. The proposal aims to strike a balance between Republican lawmakers, who favor taxing rewards only when they are sold, and Democrats, who support immediate taxation, as with traditional compensation. The proposal does not currently provide legislative language but outlines key priorities for updating how digital assets fit into the existing tax system.

Legislative Context and Broader Tax Reform Aims

Both lawmakers serve on the influential House Ways and Means Committee, which oversees tax policy. Their draft marks the first formal step within the committee to address crypto-specific tax treatment, separate from broader discussions on crypto regulation.

The lawmakers designed the bill to align crypto tax rules more closely with those applied to traditional securities and commodities. The framework would allow cryptocurrency traders to adopt mark-to-market accounting, which taxes unrealized gains and losses annually based on market value. This method offers potential benefits to active traders by enabling them to offset crypto losses against other taxable income.

The draft also includes provisions to extend wash sale rules to digital assets. Wash sales occur when an investor sells a security at a loss and repurchases a substantially identical asset shortly after. Applying these rules to cryptocurrencies would close an existing loophole and reduce opportunities for tax avoidance through the harvesting of short-term losses.

Implications for Crypto Investors and Future Legislation

The legislation could bring greater clarity and consistency to the treatment of digital assets under U.S. tax law. By introducing tax exemptions for stablecoin microtransactions and offering flexible tax options for staking income, the bill addresses areas that have been subject to uncertainty and dispute.

The draft also supports international investors by including digital assets in capital gains tax exemptions for foreign traders using U.S.-based brokers or platforms. This MOVE may strengthen the position of domestic exchanges in the global cryptocurrency market.

The bill remains in draft FORM and may change as it progresses. Still, it signals renewed efforts in Congress to create a comprehensive crypto tax framework in line with evolving digital finance practices.