U.S. Lawmakers Propose Tax Relief for Everyday Crypto Users

U.S. lawmakers have proposed new rules to simplify crypto taxes for regular users, including exempting small stablecoin transactions from tax and allowing taxpayers to defer taxes on staking and mining rewards.

The proposal put forward by Representatives Max Miller of Ohio and Steven Horsford of Nevada aims to update U.S. tax laws to align with how people use digital assets for payments.

Under the draft, users wouldn’t have to pay tax on gains or losses when using approved stablecoins for purchases up to $200, as long as the stablecoin is pegged to the U.S. dollar, stays close to $1, and is issued by an authorized company.

The bill also includes protection to prevent misuse, so the tax break won’t apply if a stablecoin’s price moves too far from $1, brokers or dealers won’t qualify, and the Treasury can set extra rules and reporting requirements to prevent abuse.

In addition to payment transactions, the proposal allows users to opt for delayed taxation on staking and mining rewards for up to five years, rather than being taxed immediately upon receipt, providing relief from phantom income issues.

Crypto Industry Pushes Back Against Stablecoin Reward Limits

Last week, the Blockchain Association and over 125 crypto companies wrote to the U.S. Senate Banking Committee to oppose plans that would limit stablecoin rewards on third-party platforms. 

Some of the groups and companies that signed the letter include Bitcoin Policy Institute, Crypto Council for Innovation, DeFi Education Fund, Solana Policy Institute, Digital Chamber, a16z Crypto, Coinbase, Gemini, Kraken, and Ripple.

The group argued that expanding the GENIUS Act limits beyond stablecoin issuers could stifle innovation and favour large companies. They pointed out that crypto rewards are like the bonuses banks and credit cards offer, and banning them for stablecoins would make competition unfair.