Lawmakers Debut Plan to Update Tax Code for Stablecoin Payments

The draft legislation, released Saturday (Dec. 20) by U.S. Rep. Max Miller, R-Ohio, and U.S. Rep. Steven Horsford, D-Nev., is designed to update the tax code for digital assets.

“America’s tax code has failed to keep pace with modern financial technology,” Miller said in a news release. 

“This bipartisan legislation brings clarity, parity, fairness and common sense to the taxation of digital assets. It protects consumers making everyday purchases, ensures the rules are clear for innovators and investors, and strengthens compliance so everyone plays by the same rules.” 

The bill is aimed at creating what the legislators call a “commonsense tax treatment” for regulated payment stablecoins, while making sure everyday payment transactions don’t trigger unnecessary tax reporting.  

The legislation would also clarify source-of-income rules for digital asset trading, which the lawmakers say offers certainty for U.S. and foreign market participants while upholding strong tax enforcement standards. 

And the law would also extend current securities-lending tax rules to digital assets, to make sure “that bona fide digital asset lending is not treated as a taxable sale,” the release added.

“Like any emerging technology, cryptocurrencies need guardrails that allow innovation to grow while protecting taxpayers and the integrity of our tax system,” Horsford said. 

“Today, even the smallest crypto transaction can trigger tax calculation, while other areas of the law lack clarity and invite abuse. Our discussion draft of the Digital Asset PARITY Act takes a targeted approach that provides an even playing field for consumers and businesses alike to benefit from this new form of payment.”

In other crypto regulation news, the Federal Deposit Insurance Corp. (FDIC) said last week that it was considering a proposal that would establish procedures under which the banks it supervises could seek to issue stablecoin payments.

“Under the proposal, the FDIC would adopt a tailored application process that would enable the FDIC to evaluate the safety and soundness of an applicant’s proposed activities based on the statutory factors while minimizing the regulatory burden on applicants,” FDIC Acting Chairman Travis Hill said in a statement.

As PYMNTS wrote days later, the proposed rulemaking — a first under the GENIUS Act — is important for banks as it provides regulatory clarity and allows internal investment committees to approve pilots. 

“It allows institutions to move beyond proofs of concept into production systems,” that report said. “In other words, regulation is not slowing stablecoins down this year. It is enabling them.”