Lawmakers Propose Tax Breaks for Small Stablecoin Payments and Staking

Jimmy Aki
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A new bill in the US House could change how digital assets are taxed. The draft law aims to simplify the use of Crypto for daily payments.

It also seeks to fix a common problem with staking rewards.

The proposal has two main parts. First, it would remove capital gains tax reporting for stablecoin payments under $200.

This means people wouldn’t need to calculate taxes for small, everyday purchases. Second, it changes how staking rewards are taxed to prevent “double taxation.”

Stablecoin Payments Seen as Entry Point for Crypto Tax Reform

The proposal focuses on small stablecoin payments made for everyday purchases. Under the draft, those payments would not require capital gains calculations, removing the need to track taxes on routine spending.
The exemption would not apply to brokers or dealers, and the Treasury would still be able to step in if abuse becomes a concern.

Supporters of the change say stablecoins are no longer used mainly for trading but for simple payments.

As digital dollars become more common in retail payments, they say applying a capital gains tax to small purchases no longer reflects how these assets are used.

Limiting the exemption to low-value transactions is intended to encourage legitimate use without opening loopholes for large-scale tax avoidance.

This change has been discussed for months. Tech leaders have warned that complex tax rules make crypto impractical for daily life.

Jack Dorsey publicly made that case last October, arguing that Bitcoin and similar assets cannot function as payment tools if routine purchases trigger tax calculations.

The debate has also gained traction in Washington. At a Senate Finance Committee hearing, Coinbase’s head of tax policy cautioned that taxing every small crypto payment could push innovation outside the United States.

Senator Cynthia Lummis has voiced similar concerns, confirming that the Digital Asset Tax Fairness Act is already before Congress.

That proposal would exempt crypto transactions under $300, with an annual cap of $5,000, as part of a broader effort to modernize US crypto regulation.

Pressure Mounts to Rethink Staking Tax and Double Taxation

Beyond stablecoin payments, the House draft takes aim at long-standing issues around staking and mining taxes. Under current guidance, rewards may be taxed when received and again when sold, creating what critics describe as double taxation.

The new proposal would allow taxpayers to elect to defer income recognition on rewards for up to five years.

Sponsors Max Miller and Steven Horsford describe the approach as a middle ground. Rather than immediate taxation or full deferral until sale, the option is designed to reduce phantom income while keeping rewards within the tax system.

The draft also extends securities lending tax treatment to certain digital asset lending arrangements, applies wash sale rules to actively traded crypto assets, and allows eligible traders to elect mark-to-market accounting.

A separate but related effort is increasing pressure on the Internal Revenue Service to revise its stake tax guidance.

A bipartisan group of 18 House lawmakers, led by Mike Carey, has urged the agency to reconsider its approach. In their letter to the IRS, the lawmakers said taxing staking rewards before they are sold can inflate tax bills and discourage people from taking part in staking.

They urged the agency to tax rewards only when they are sold and asked whether new guidance could be issued before 2026, pointing to stablecoin tax relief as a starting point for wider changes to crypto tax rules.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.