US lawmakers propose tax break for small stablecoin payments, staking rewards

US lawmakers just dropped a discussion draft that could be a game-changer for crypto taxes — think less paperwork, more spending power. Reps Max Miller (Ohio) and Steven Horsford (Nevada) are pushing to amend the Internal Revenue Code to finally catch up with how we actually use digital assets. The goal? "To eliminate low-value gain recognition arising from routine consumer payment use of regulated payment stablecoins." Translation: they want to stop taxing your coffee purchases made with stablecoins.

Here's the deal: if this passes, you won't have to recognize gains or losses on stablecoin transactions up to $200. But there are catches — the stablecoin must be issued under the GENIUS Act, pegged to the US dollar, and trading tight around $1. No loopholes for brokers or dealers either, and Treasury gets to set anti-abuse rules. Basically, they're trying to make stablecoins work like cash without the tax headache.

But wait, there's more — they're tackling the "phantom income" problem too. Under this draft, you could elect to defer taxes on staking or mining rewards for up to five years instead of getting hit immediately. The draft calls this "a necessary compromise between immediate taxation upon dominion & control and full deferral until disposition." Finally, some breathing room for validators and miners.

The proposal doesn't stop there — it extends securities lending tax treatment to certain digital asset lending, applies wash sale rules to actively traded crypto (bye-bye tax loopholes), and lets traders/dealers elect mark-to-market accounting. This is comprehensive tax reform, not just a band-aid.

Meanwhile, the Blockchain Association just sent a letter to the US Senate Banking Committee signed by 125+ crypto companies and groups, pushing back against expanding stablecoin reward restrictions. They're arguing that banning third-party platform rewards would kill innovation and hand the market to big incumbents. Their point? If banks and credit cards can offer rewards, why can't stablecoins? Fair competition matters.

This is all happening while Galaxy predicts stablecoins will overtake ACH transaction volume by 2026. The timing couldn't be more perfect — as crypto goes mainstream, the tax code needs to keep up. These proposals could make 2026 the year crypto taxes finally make sense.