The US Crypto Assets tax revolution! $200 stablecoin tax exemption, stakers defer payment for 5 years.

U.S. House bipartisan lawmakers have jointly introduced the “Digital Asset Equalization Act,” bringing a historic breakthrough to the tax system for Crypto Assets. According to a Bloomberg report, the bill co-sponsored by Republican Representative Max Miller of Ohio and Democratic Representative Steven Horsford of Nevada will exempt Capital Gains Tax on stablecoin transactions under $200 and allow rewards from staking and Mining to choose a five-year tax deferral.

Stake Tax Controversy Welcomes Five-Year Deferred Compromise Plan

(Source: U.S. House of Representatives)

The timing of when to pay taxes on staking and mining rewards has always been one of the most controversial topics in the cryptocurrency tax realm. According to the guidance reiterated by the IRS during the Biden administration in October 2024, rewards must be taxed as income when received. This means that even if you have not sold your staking rewards, simply holding the tokens requires immediate tax payment. If the token price subsequently drops, investors will face a double loss of “taxes paid but asset depreciation.”

Crypto Assets advocates strongly oppose the logic of “unrealized gains taxation.” Senator Cynthia Lummis (Republican, Wyoming) introduced a bill in July arguing that rewards should be taxed only upon sale, which aligns with traditional investment logic—only realized profits trigger tax obligations. However, the Treasury Department and the IRS are concerned that complete deferral would lead to tax revenue loss and opportunities for tax evasion.

The Miller-Horsford bill proposes an innovative compromise: taxpayers can choose to defer tax on their gains for five years, after which they will be taxed as ordinary income at fair market value. The draft of the bill describes this practice as “a necessary compromise between immediate taxation on ownership and control and complete deferral until disposal.” This design provides investors with a reasonable liquidity buffer while ensuring that taxes are ultimately collected.

The option of a five-year extension is particularly friendly for long-term stakers. Suppose you earn $10,000 in Ethereum staking rewards in 2026, by choosing to defer, you won't need to pay taxes based on the market value at that time until 2031. If the price of Ethereum rises significantly within five years, although the final tax amount may be higher, you have ample time to plan your liquidity; if the price drops, the actual tax burden will be lower than in the case of immediate taxation.

stablecoin 200 USD safe harbor liberation daily payment scenarios

The tax exemption threshold for stablecoins is another significant breakthrough in the legislation. The draft aims to exempt capital gains tax on regulated, dollar-pegged stablecoin transactions valued at less than $200. Congressman Horsford told KOLO TV, “Today, even the smallest cryptocurrency transactions can trigger tax calculations, which imposes a heavy compliance burden on everyday consumers.”

Under the current tax law, every time a stablecoin is used to buy coffee or pay for meals, it is technically considered a “disposal of assets” and requires the calculation of capital gains or losses to be reported. This cumbersome tax requirement severely hinders the practical application of stablecoins as a payment tool. A $200 tax-free threshold will fundamentally change this situation, allowing small daily expenses to no longer require recording the cost basis and gains or losses of each transaction.

Three Major Limiting Conditions of Stablecoin Safe Harbor

Issuing Institution Qualification Restrictions: Stablecoins must be issued by institutions authorized under the “GENIUS Act”, ensuring that the issuer is federally regulated and meets adequate reserve and transparency requirements.

Price Stability Test: Must be pegged only to the US dollar and maintain a price within 1% of $1 on at least 95% of trading days over the past 12 months, excluding stablecoins with high de-pegging risk.

Broker Exclusion Clause: Transactions involving stablecoins carried out by brokers and traders are not exempt, preventing professional traders from exploiting this clause for large-scale arbitrage to evade taxes.

The draft indicates that legislators are still assessing whether to set an annual aggregate cap to prevent the clause from being used to protect investment interests. This shows that regulators are seeking a balance between encouraging everyday use and preventing abuse. If an annual cap is set (for example, $10,000 per person per year), it will further ensure that the clause serves genuine consumer demand rather than large investment transactions.

Overview of Other Important Tax Provisions

The draft expands existing securities tax rules to digital assets, filling several gray areas in Crypto Assets taxation. Although these provisions are not as striking as the tax deferral for staking and the tax exemption for stablecoins, they have significant implications for professional traders and institutional investors.

The wash sale rule is extended to crypto assets to prevent investors from immediately repurchasing within 30 days after selling at a loss to deceive tax credits. Under current law, stock trading is subject to the wash sale rule, but crypto assets are not explicitly included, allowing some investors to exploit this loophole for tax optimization. The new bill will close this loophole, aligning the tax treatment of crypto assets with that of traditional securities.

The presumed sale rules have also been expanded to prevent investors from using complex financial engineering to lock in profits and defer tax obligations. The tax principles of securities lending have been extended to qualified digital asset loans, making cryptocurrency lending a tax-free event, provided that the lending assets must be interchangeable and highly liquid. Non-fungible tokens (NFTs) and non-liquid assets are excluded to ensure that this provision is not abused.

Professional traders can choose the mark-to-market accounting method, which is particularly important for high-frequency traders, as it allows the confirmation of all unrealized gains and losses at market value at year-end, simplifying the tax handling of a large number of transactions. The draft also exempts qualified assessment requirements for digital asset charitable donations exceeding $10 billion in market value, reducing compliance costs for large cryptocurrency charitable donations.

Another provision clearly states that passive agreement-level staking conducted by investment funds does not constitute a transaction or business, providing tax certainty for institutional investors participating in staking and avoiding additional tax obligations triggered by staking activities being classified as actively operating a business.

Bipartisan Cooperation and Prospects for Passage

The cooperation between the two parties on cryptocurrency tax legislation is extremely rare. Miller, as a member of the House fundraising committee, represents the Republican Party's open attitude towards the field of cryptocurrency; Horsford represents the increasingly friendly faction towards cryptocurrency within the Democratic Party. The Trump administration has expressed support for cryptocurrency tax relief, but Lummis previously attempted to include a $300 minimum threshold provision in the budget reconciliation bill, which failed to gain enough votes, indicating that the legislative process remains challenging.

A spokesperson for Horsford told Bloomberg, “We hope the committee can work together in good faith to develop these crucial rules.” Miller stated last week that he believes the bill can be passed before August 2026, and the stablecoin provisions will take effect for tax years beginning after December 31, 2025.