Crypto US News: US Lawmakers Draft New Crypto Tax Framework

Bipartisan lawmakers propose targeted crypto tax relief, aiming to ease compliance, align digital assets with securities law, and clarify reward taxation.

US lawmakers are advancing a bipartisan crypto tax framework. The proposal is aimed at getting clearer rules around the daily use of digital assets. Furthermore, it is a bid to lower compliance burdens for small transactions. According to Bloomberg, the draft is a sign of increasing pressure from the crypto industry. Uncertainty discourages responsible innovation and reporting, lawmakers say.

Bipartisan Proposal Targets Stablecoins and Rewards

According to Bloomberg, Republican Max Miller and Democrat Steven Horsford are in the lead. The framework in particular, exempts capital gains on some stablecoin payments. The exemption exempts regulated, dollar-pegged, stablecoins of $200 or less. Consequently, small purchases would be exempt from complicated tax calculations.

Furthermore, there are some strict criteria that stablecoins must satisfy. They have to be issued under the framework of the GENIUS Act. In addition, they need to closely follow the US dollar. The draft requires prices not exceed 1% of one dollar for 95% of days. Brokers and dealers are also not included in this safe harbor.

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Meanwhile, the bill addresses staking and mining taxation. This issue has polarized lawmakers for years. Under the proposal, taxpayers can defer taxes on rewards. The deferment may be for as long as five years. Eventually, rewards would be taxed as ordinary income.

Horsford said guardrails are key to emerging technologies. He argued existing rules unfairly penalize small users of crypto. Even small transactions can cause taxable events today. Therefore, the proposal is to bring the balance and fairness back.

Securities Alignment Signals Broader Crypto Tax Shift

Beyond stablecoins, the framework brings crypto taxation in line with securities law. Eligible traders were able to choose mark-to-market accounting. This provides provision for unrealized gains and losses to be realized on an annual basis. Such treatment is already available for traditional financial traders.

In addition, the proposal expands wash-sale rules to crypto. Investors could no longer claim losses if they buy back identical tokens in a short period of time. Lawmakers say this seals a loophole. As a result, there would be restrictions on crypto losses similar to stocks.

Charitable giving is also given attention to. The draft would waive the appraisal requirements for large donations of cryptocurrency. Supporters claim that this makes it easier for philanthropy with digital assets. However, protections from abuse are still under debate.

Importantly, the lawmakers can include an annual cap on the stablecoin exemption. This would prevent shielding the investments gains. Discussions are still ongoing, according to the draft. Final thresholds are undefined.

The framework fits within wider efforts by Congress. The GENIUS Act is already passed by the House. That bill regulates the issuers of stablecoins. Separately, the CLARITY Act sets out what constitutes securities and what is commoditized for securities. Together, these measures are intended to give a modern face to the oversight of crypto.

IRS Shifts Crypto Tax Reporting Burden to Exchanges

Meanwhile, the Internal Revenue Service is pushing ahead on reporting rules. Starting in 2025, brokers will be required to report the sale proceeds of cryptocurrencies. Cost basis reporting would follow in 2026. A new Form 1099-DA will resemble stock market disclosures.

With this, the responsibility of reporting is shifted from the individual to the platforms. Lawmakers believe that this improves the accuracy of compliance. Combined with the tax framework, the oversight could become much tighter.

Overall, the proposal represents a maturing of approach on policy. With various debates going on in the country, a common feature is bipartisan cooperation. If implemented, the framework could redefine crypto tax. Market participants are now waiting for revisions, caps and eventual legislative movement.