In a significant move toward crypto regulatory clarity, U.S. Representatives Max Miller (R-OH) and Steven Horsford (D-NV) have drafted a preliminary tax framework proposal. The bipartisan effort, emerging amid a regulatory shift under the new Trump administration, seeks to align digital asset taxation with traditional securities and provide specific exemptions.
A key feature of the draft legislation is the creation of a capital gains tax safe harbor for transactions involving regulated stablecoins. The proposal aims to shield transactions where the stablecoin's value remains consistently between $0.99 and $1.01 from taxation, though this exemption would be limited to transactions under $200. The final text may modify which tokens qualify.
The proposal also tackles the contentious issue of taxing staking and mining rewards. Under current IRS guidance (Revenue Ruling 2023-14), rewards are taxed as income upon receipt, with subsequent sales taxed again as capital gains—a system critics label as double taxation. Miller and Horsford's draft seeks a compromise, allowing taxpayers to defer tax on these rewards for up to five years, after which they would be taxed as income based on fair market value.
This legislative push is bolstered by a separate, bipartisan letter from 18 House members led by Rep. Mike Carey (R-OH) to IRS Acting Commissioner Scott Bessent. The letter, signed by lawmakers from both parties, urges the IRS to "quickly review and update" its 2023 staking guidance before the 2026 tax year begins. They argue taxation should occur at the point of sale to ensure stakers are taxed on actual economic gain.
The draft legislation includes several other provisions: bringing digital assets under the securities/commodities tax regime; including cryptocurrencies in capital gains tax exemptions for foreign investors using U.S. intermediaries; permitting mark-to-market accounting for traders; and restricting loss deductions from wash trades to "close existing loopholes." Industry leaders, including the CEOs of the Solana Policy Institute and the Crypto Council for Innovation, have endorsed these efforts, citing the need for the U.S. to maintain competitiveness in digital assets.
