U.S. House pushes 'tax-free' treatment for small stablecoin payments... Bitcoin excluded

'Tax-free' for stablecoin payments under $200

Bitcoin excluded… controversy over differential taxation by coin

The U.S. Congress is moving to exempt small stablecoin transactions from taxes in a bid to lower the barriers to using virtual assets (crypto) for everyday payments. However, with Bitcoin (BTC) excluded from the measure, a debate is flaring over differential taxation by asset.

According to key tax provisions in the draft “Digital Asset Parity Act (PARITY Act)” released on the 27th (local time), a “de minimis” rule would be introduced to waive capital-gains tax reporting and payment obligations for stablecoin payments or transactions of less than $200 per transaction. The aim is to eliminate the hassle under current law, where even buying a cup of coffee with coins requires calculating cost basis and reporting taxes each time.

The bill also redefines the asset characteristics of stablecoins. If the price fluctuation of a dollar-pegged stablecoin is within 1% versus its cost basis, profits from the transaction would be excluded from taxation. In effect, it would treat stablecoins as a cash-like payment instrument.

The proposal also revises taxation for mining and staking. It includes a measure to defer the taxation point for crypto received as rewards for up to five years, easing the so-called “phantom income” problem in which taxes are imposed before the asset is sold.

An official at the Digital Chamber said, “The current tax code is not keeping pace with the speed of technological development,” adding, “This bill will provide clear standards for investors and companies and serve as an opportunity to strengthen industrial competitiveness in the U.S.”

Still, the draft is drawing pushback from Bitcoin investors. With the small-transaction tax exemption applying only to stablecoins, questions of fairness are being raised. The Bitcoin Policy Institute (BPI) criticized the move, saying, “If the goal is true parity, the same standard should apply to Bitcoin payments,” and adding, “A structure that grants benefits only to certain assets could distort the market.”