Bipartisan lawmakers in the U.S. House are advancing a draft proposal that would reshape how digital asset activity is taxed, with targeted relief for stablecoin payments and staking rewards. The Digital Asset Protection, Accountability, Regulation, Innovation, Taxation, and Yields Act seeks to modernize long standing tax rules that many investors say have failed to keep pace with crypto usage. At the center of the proposal is an exemption from capital gains taxes for certain low value stablecoin transactions, aimed at reducing friction for everyday payments. Lawmakers behind the bill argue that routine purchases made with dollar pegged tokens should not trigger complex tax calculations, a problem that has limited broader adoption. The proposal reflects growing recognition in Washington that crypto is moving beyond speculation and into practical use cases.
The bill would also allow individuals who earn rewards through staking or mining to defer income recognition for up to five years, addressing what critics describe as phantom income that can arise before assets are sold. In addition, the proposal aligns digital asset taxation more closely with existing frameworks for securities and commodities, while introducing safeguards against abuse. These include applying wash sale rules to crypto to prevent traders from claiming tax losses while maintaining similar positions, as well as new provisions targeting derivative strategies designed to delay taxes indefinitely. Active traders could elect mark to market accounting, recognizing gains and losses annually based on fair market value. Supporters say these measures balance relief with stronger compliance.
Beyond domestic investors, the bill includes provisions aimed at foreign participants who trade digital assets through U.S. brokers, extending certain tax benefits to encourage activity within regulated channels. Nonrecognition treatment would apply to some digital asset loans, while exclusions would limit the scope to avoid thinly traded tokens and certain collectibles. Most measures would take effect upon enactment, though the stablecoin exemption would begin in tax years starting after the end of 2025. The proposal arrives as lawmakers debate broader crypto regulation and as stablecoins gain prominence in payments and settlement discussions. While the draft still faces revisions and debate, it signals momentum toward clearer tax treatment for digital assets at a time when policy uncertainty remains a key concern for markets.
