Sen. Steve Daines introduced a digital asset tax bill in the U.S. Senate on Sept. 30 that would spare qualifying stablecoin payments from gain or loss recognition while extending wash-sale restrictions to traded digital assets.

The 56-page measure, titled the Aligning Digital Assets with Principles of Taxation Act, would also provide targeted relief for small network transaction fees and establish new sourcing rules for income from staking and mining. Daines framed the proposal as a way to add tailored payment rules while preserving anti-abuse provisions for trading activity.

The Internal Revenue Service currently treats digital assets as property for federal tax purposes. Under that framework, spending crypto can trigger gain or loss calculations for taxpayers, who must track each asset's cost basis and its value at the time of disposition, a friction point the legislation seeks to address for stablecoin transactions.

Stablecoin Payment Exemption

Section 2 of the bill provides that taxpayers would recognize no gain or loss on eligible payments made with stablecoins. The Treasury Department would publish a list of qualifying stablecoins and refresh it at least once every three months.

Stablecoins are digital tokens designed to hold a steady value against the U.S. dollar, and the bill would tie eligibility to how closely each token tracked that peg in practice. Eligibility would be limited to qualified U.S. dollar stablecoins purchased within 3% of $1. Treasury would review whether each token traded within that range during the preceding 12 months. Traders, brokers, dealers, and similar businesses would not qualify for the payment exemption.

The legislation would also remove broker information reporting for qualifying stablecoin transactions. Taxpayers would nonetheless keep records separating exempt purchases from other stablecoin activity. If Congress enacted the bill, the stablecoin tax provisions would apply after Dec. 31, 2026, leaving existing property-treatment rules in place for transactions before that date.

The exemption would create a narrower rule for eligible dollar-pegged stablecoins within the broader property framework established by IRS Notice 2014-21, which treats convertible virtual currency as property. Under that notice, general property principles apply when taxpayers sell, exchange, or spend those assets.

Wash-Sale and Transaction Fee Provisions

Section 7 would extend wash-sale restrictions to traded digital assets, excluding qualified U.S. dollar stablecoins. The bill would also treat economically equivalent tokenized or bridged assets as substantially identical in specified circumstances, though certain validation rewards and mark-to-market positions would receive exceptions.

Existing wash-sale rules generally restrict loss deductions around repurchases of substantially identical covered assets, a restriction long applied to stocks and securities. By adding traded digital assets to that framework, the provision would narrow tax-loss strategies currently available across many crypto transactions and bring them under the same treatment.

Section 11 creates separate relief for qualifying digital asset transaction costs. No gain or loss would be recognized when covered transaction costs totaled $10 or less. The definition spans network fees, gas fees, commissions, transfer taxes, and similar expenses.

The fee exemption would exclude traders, brokers, dealers, certain validation businesses, and similar operations. It would also exclude taxpayers who initiated more than 5,000 digital asset transactions during the prior taxable year. Like the stablecoin provisions, the fee relief would apply to covered asset dispositions after Dec. 31, 2026.

Rules for Staking, Mining and Lending

The proposal establishes source rules for income from digital asset validation activities. U.S. persons would generally source qualifying validation income inside the United States, while foreign persons would generally source it outside the country, subject to branch rules.

For mining, qualifying pool payments and transaction fees would count as validation income. Compensation for hosting or equipment-management services would fall outside that definition. Treasury would receive authority to issue additional branch-attribution rules.

The bill would also expand securities-lending tax treatment to qualifying digital asset loans and propose mark-to-market elections for eligible digital asset dealers and traders. Other sections address charitable contributions, constructive sales, investment trusts, and publicly traded partnerships.

Daines outlined these principles during a Senate Finance Committee hearing on July 16. He said familiar tax rules should apply when digital assets resemble securities or commodities, and called for tailored rules covering stablecoin payments, network fees, staking, lending, and validation activity.

Separate Track in the House

The Senate proposal followed parallel digital asset tax legislation in the House. The House Ways and Means Committee approved the Digital Asset Tax Certainty Act on Sept. 16, with committee records showing lawmakers ordered the measure favorably reported by a 38-5 vote.

The House bill likewise addresses payments, wash sales, mining, staking, and mark-to-market accounting. However, the two chambers are considering separate legislation with different text, and the versions would need to be aligned before a single measure could advance through both.

Daines' bill lists Cynthia Lummis, Bernie Moreno, and Tim Scott as co-sponsors. Treasury Secretary Scott Bessent had committed to working with Congress on digital asset tax legislation, a pledge made during a June 3 Senate Finance Committee exchange with Daines.

As of Sept. 30, Congress had not enacted either proposal. No Senate Finance Committee markup date appeared in the official materials reviewed, leaving committee consideration or another announced Senate action as the next procedural milestone. Key operating details would also fall to Treasury after any enactment, including the quarterly stablecoin eligibility list and the branch-attribution rules for validation income.

This article is for informational purposes only and does not constitute tax, legal, or financial advice. The Senate and House proposals have not become law.