The United States has introduced a new framework for cryptocurrency taxation: small stablecoins are tax-exempt, and stake taxes can be deferred for five years.

The “Digital Asset Equivalence Act” proposed by lawmakers Miller and Horsford will provide a Capital Gains Tax exemption for eligible stablecoin transactions.

According to the draft, transactions of stablecoins valued under $200 will no longer be subject to Capital Gains Tax. This “safe harbor” provision applies only to regulated, dollar-pegged stablecoins, and does not apply to other cryptocurrencies such as Bitcoin or Ethereum.

The bill has also proposed a compromise on the tax treatment of staking and mining rewards, allowing taxpayers to defer the related taxes for five years.

01 Legislative Background

U.S. House Representatives Max Miller and Steven Horsford are drafting a cryptocurrency tax framework called the “Digital Asset Equalization Act.” Both lawmakers are from the House Fundraising Committee, which is responsible for matters related to U.S. tax law.

This draft aims to address the long-standing tax uncertainties in the cryptocurrency space, attempting to align the taxation of digital assets with the tax treatment of traditional securities.

Lawmakers have chosen to start with stablecoins, partly because Congress has passed relevant legislation on stablecoin regulation. The draft attempts to find a balance between the existing tax system and the development of the cryptocurrency industry.

02 stablecoin safe haven

According to the new draft, transactions involving regulated stablecoins that are pegged to the US dollar and valued under $200 will be exempt from Capital Gains Tax.

To qualify for this tax exemption, stablecoins must meet strict conditions: they must be issued by an issuer authorized under the GENIUS Act, fully backed by US dollars, and must maintain a price within the range of $1 ± 1% for at least 95% of trading days in the past 12 months.

This “safe harbor” clause only applies to consumers' daily payment scenarios and does not include transactions between brokers and dealers, nor does it apply to other cryptocurrencies.

Lawmakers are also considering whether to set an annual cap to prevent this provision from being used for tax avoidance rather than to promote everyday consumption.

03 Staking Rewards Tax Compromise

The tax provisions on staking and mining rewards in the bill are seen as an important compromise. Currently, according to the guidance issued by the IRS during the Biden administration, staking and mining rewards are considered taxable income when received.

The bill proposed by Senator Cynthia Lummis suggests taxing only when the rewards are sold.

The new draft takes a middle ground: it allows taxpayers to choose to defer the tax on staking and mining rewards for five years. After five years, these rewards will be taxed as ordinary income at their fair market value.

The draft refers to this proposal as “a necessary compromise between immediate taxation and full deferral of taxation until disposal.”

04 Other Key Provisions of the Bill

In addition to the tax treatment of stablecoins and staking rewards, the Digital Assets Equal Treatment Act also includes several other important provisions:

Cryptocurrencies will be subject to the same tax rules as securities, including the “wash sale rule.” This rule prevents investors from selling an asset at a loss and then immediately repurchasing it, thereby improperly claiming a tax deduction.

Professional traders will be able to use the fair value accounting method. This method requires taxpayers to recognize unrealized gains and losses each year based on the fair market value of the securities.

For charitable donations of digital assets with a market value exceeding $10 billion, the draft will exempt qualified assessment requirements. In addition, the draft clarifies that passive agreement-level staking of investment funds does not constitute a transaction or business activity.

05 Impact on the cryptocurrency market

If this tax framework is approved, it could change the tax treatment of cryptocurrencies. For stablecoins, the tax exemption policy for small transactions may increase their usage in everyday payments, especially for transactions valued under $200.

For stakers, the five-year tax deferral provides greater flexibility. They can plan their taxes over a longer period without facing the tax burden in the year they receive their rewards.

According to Miller, the stablecoin safe harbor provision is set to take effect for tax years after December 31, 2025, while the broader legislation may advance before August 2026.

06 Suggestions for Gate Users

For Gate users, the new tax framework will directly affect trading and staking strategies. Users should note that stablecoin transactions below $200 may enjoy tax exemptions, which could change the way small payments and transfers are made.

Users involved in staking activities should consider how to take advantage of the five-year tax deferral option. This means that staking rewards will not immediately incur tax implications upon receipt, but will only be taxable after five years.

Gate users should continue to report all cryptocurrency transactions on the appropriate tax reporting platform. Even if some transactions may meet the new exemption criteria, maintaining complete transaction records is still crucial.

It is worth noting that under the current tax rules, losses from cryptocurrency transactions cannot be used to offset other income, and these losses cannot be carried forward to subsequent years. It remains to be seen whether this regulation will change under the new tax framework.

Staying aware of regulatory changes and promptly adjusting tax strategies is key to maintaining compliance in the cryptocurrency space.

Future Outlook

This new draft clearly conveys a message: lawmakers are taking the issue of cryptocurrency taxation seriously. As policies become clearer, the United States may provide a reference for cryptocurrency tax legislation in other countries.

Congressman Miller stated in a statement: “U.S. tax law has not kept pace with the development of modern financial technology. This bipartisan legislation will bring clarity, consistency, fairness, and common-sense rules to the taxation of digital assets.”

Cryptocurrency tax experts generally believe that clarity in tax laws is crucial for the industry's development. Clear rules can reduce compliance costs and attract more traditional investors into this field.

As cryptocurrencies increasingly integrate into the mainstream financial system, the standardization and rationalization of tax treatment has become an inevitable trend. Both individual users and institutional participants need to be prepared for this change.