Key
Takeaways
- US House crypto stablecoin transactions under $200 could be exempt from capital gains
taxes under a draft bill.
- Lawmakers aim to remove tax friction from everyday crypto
stablecoin payments.
- The proposal reflects growing congressional focus on
practical crypto use cases.
WASHINGTON D.C. (NewsBlock) -
US House crypto stablecoin transactions under $200
would be exempt from capital gains taxes under draft legislation circulating
among lawmakers, a move aimed at easing everyday use of crypto stablecoin
payments.
The proposal matters as Congress
debates how digital assets should be taxed and regulated, with lawmakers from
both parties acknowledging that current tax rules make small crypto
transactions impractical for routine purchases such as food, transportation, or
online services.
The draft bill, prepared by a group
of House representatives, would amend the Internal Revenue Code to exclude capital
gains reporting for stablecoin transactions below the $200 threshold, according
to people familiar with the text. The exemption would apply per transaction,
not as an annual cap.
Supporters of the bill said the goal
is to treat stablecoins more like cash or foreign currency for small purchases
rather than speculative investments.
“Americans should not have to
calculate capital gains just to buy a cup of coffee,” one House aide involved
in drafting the legislation said.
Under current U.S. tax law,
cryptocurrencies are treated as property, meaning that each transaction can
trigger a taxable event if the asset’s value has changed since acquisition.
That framework applies even to stablecoins, which are typically pegged to the
U.S. dollar.
Stablecoins such as USD Coin and
Tether are widely used for payments, remittances, and trading, with a combined
market capitalization exceeding $150 billion, according to industry
data. Their values are designed to remain close to $1, but small fluctuations
can still generate taxable gains or losses.
Lawmakers said the bill is intended
to align tax policy with how stablecoins are actually used.
“Stablecoins are primarily payment
instruments, not investment vehicles,” another congressional staffer said. “The
tax code hasn’t caught up with that reality.”
The bill does not propose a similar
exemption for volatile cryptocurrencies such as bitcoin or ether, which
lawmakers said are more often used as speculative assets rather than payment
tools.
The proposal follows earlier
bipartisan efforts to introduce a “de minimis” exemption for crypto
transactions. Previous bills sought to exempt gains below $200 or $600
but failed to advance amid broader debates over crypto regulation and tax
enforcement.
Industry groups said the renewed
push reflects growing acceptance of stablecoins within the financial system.
“This is a targeted fix that
addresses a real barrier to adoption,” said Kristin Smith, chief executive of
the Blockchain Association. “Without it, stablecoins cannot function as
practical payment instruments.”
The Internal Revenue Service has
previously warned that crypto transactions, regardless of size, are subject to
reporting requirements. The agency has stepped up enforcement in recent years,
adding digital asset questions to tax forms and increasing audits related to
crypto activity.
Treasury officials have argued that
exemptions could complicate enforcement, though they have acknowledged the
administrative burden associated with tracking small transactions. The Treasury
Department declined to comment on the draft bill.
The measure is being discussed
alongside broader stablecoin legislation in both chambers of Congress. The
House Financial Services Committee has advanced bills aimed at setting reserve
requirements and regulatory oversight for stablecoin issuers, while the Senate
is considering parallel proposals.
“Tax policy and regulatory policy
are moving on separate tracks, but they are closely linked,” said Jaret
Seiberg, a policy analyst at TD Cowen. “How Congress treats stablecoins for tax
purposes signals how seriously it views them as part of the payment system.”
Financial institutions have
increasingly explored stablecoin-based settlement systems to move money faster
and at lower cost. Several large banks and payment firms are testing
blockchain-based transfers that rely on dollar-backed tokens.
Lawmakers backing the bill said
reducing tax complexity could help the United States remain competitive as
other jurisdictions move to integrate stablecoins into payment infrastructure.
“If we want innovation to happen
here, the rules have to make sense,” one lawmaker said.
Critics cautioned that carving out
exemptions could create loopholes or encourage tax avoidance if thresholds are
raised in the future. Some consumer advocates also warned that stablecoin
adoption carries risks related to issuer solvency and transparency.
“Tax relief should not come at the
expense of investor protection,” said Dennis Kelleher, president of Better
Markets.
The draft bill has not yet been
formally introduced, and sponsors are still gathering feedback from tax
experts, regulators, and industry participants. Lawmakers said revisions are possible
before the text is submitted for committee consideration.
ICE data showed no immediate market
reaction among major stablecoin issuers following reports of the proposal.
The push to exempt small stablecoin
transactions also reflects changing attitudes on Capitol Hill following the
approval of spot bitcoin exchange-traded funds earlier this year and growing
institutional involvement in digital assets.
Several lawmakers who were previously
skeptical of crypto have said clearer rules are needed to distinguish between
speculative trading and practical financial tools.
“This is about common sense,” said
one House representative supporting the measure. “The tax code should not
discourage innovation that lowers costs for consumers.”
What’s
Next
The bill’s sponsors are expected to
formally introduce the measure later this year, after which it would be
referred to the House Ways and Means Committee, which oversees tax legislation.
Any exemption would require approval from both chambers of Congress and the
president’s signature.
Lawmakers said the proposal could be
folded into a broader tax or digital asset package, depending on legislative
timing. Hearings on stablecoin regulation are expected to continue into early
next year, providing another venue for debate.
Market participants will watch
whether the exemption threshold remains at $200 or is adjusted during
negotiations. Analysts said passage could accelerate stablecoin use for
everyday payments in the United States, while failure could keep adoption
limited to trading and cross-border transfers.