Crypto Tax Proposal Seeks Stablecoin Safe Harbor, Aligns With Securities

The White House, under President Donald Trump, has initiated changes in crypto regulation. Lawmakers are drafting a new tax framework to provide clarity for stablecoin transactions.

Key Points of the Proposed Crypto Tax Framework

Drafted by Representatives Max Miller and Steven Horsford.
Aims to align cryptocurrency tax treatment with traditional securities.
Proposes capital gains tax exemption for regulated stablecoin transactions valued between $0.99 and $1.01, limited to transactions under $200.
Includes safe harbor provisions for staking rewards.
Seeks to update America's tax code to reflect modern financial technology.

Aligning Digital Assets with Securities Tax Regime

IRS currently taxes staking rewards upon receipt; Republicans challenge this, preferring deferral until gain realization.
Miller and Horsford propose deferring tax on staking rewards for up to five years.
Plan aligns cryptocurrencies with existing securities and commodities tax regimes.
Proposes capital gains tax exemptions for foreign investors trading through US intermediaries.
Allows mark-to-market accounting for cryptocurrency traders to recognize unrealized gains/losses annually.
Seeks to restrict loss deductions from wash trades and close loopholes delaying tax liabilities.

Crypto