US Lawmakers Introduce Bill to Ease Crypto Tax Burden

US lawmakers have introduced a discussion draft that would ease the tax burden on everyday crypto users. The proposal, introduced by Representatives Max Miller of Ohio and Steven Horsford of Nevada, seeks to amend the Internal Revenue Code to reflect the growing use of digital assets in payments.

Easing Tax Burden on Crypto Users

The draft aims to eliminate low-value gain recognition arising from routine consumer payment use of regulated payment stablecoins. Under the draft, users would not be required to recognize gains or losses on stablecoin transactions of up to $200, provided the asset is issued by a permitted issuer under the GENIUS Act, pegged to the US dollar, and maintains a tight trading range around $1.

The bill includes safeguards to prevent abuse. The exemption would not apply if a stablecoin trades outside a narrow price band, and brokers or dealers would be excluded from the benefit. Treasury would also retain authority to issue anti-abuse rules and reporting requirements.

Deferring Taxes on Crypto Staking Rewards

Beyond payments, the proposal addresses long-standing concerns around “phantom income” from staking and mining. Taxpayers would be allowed to elect to defer income recognition on staking or mining rewards for up to five years, rather than being taxed immediately upon receipt. This provision is intended to reflect a necessary compromise between immediate taxation upon dominion & control and full deferral until disposition.

Industry Reaction and Implications

The draft also extends existing securities lending tax treatment to certain digital asset lending arrangements, applies wash sale rules to actively traded crypto assets, and allows traders and dealers to elect mark-to-market accounting for digital assets. Crypto groups have urged the Senate to rethink stablecoin rewards ban, arguing that expanding restrictions would curb innovation and increase market concentration in favor of large incumbents.

Conclusion and Future Outlook

The proposed bill has significant implications for the crypto industry, potentially easing the tax burden on users and promoting innovation. As the industry continues to evolve, it is essential to strike a balance between regulation and innovation, ensuring fair competition and preventing abuse. The outcome of this proposal will be closely watched, and its impact on the crypto market will be significant.