U.S. Lawmakers Want to Make Stablecoin Payments Tax-Free
Summary
A revised version of the Digital Asset PARITY Act would eliminate taxable events on stablecoin transactions as long as the token holds within 1% of its dollar peg. No more tracking penny-level gains every time you buy a coffee with USDC. If this passes, stablecoins become spendable like cash.
U.S. lawmakers have reintroduced a revised version of the Digital Asset PARITY Act that would fundamentally change how stablecoin transactions are taxed, replacing an earlier $200 de minimis exemption with a broader rule that eliminates taxable events entirely for most stablecoin payments.
Under current IRS rules, every stablecoin transaction is treated like selling a security. If a user buys USDC at $1.000 and spends it when its value is $1.001, the fraction-of-a-cent gain is technically taxable. In practice, this makes stablecoins nearly unusable as everyday payment instruments because every purchase generates a reportable event — even when the gain or loss is negligible.
The revised bill takes a different approach. Instead of setting a fixed dollar threshold, it establishes that no gain or loss is recognized on the sale or exchange of a regulated payment stablecoin unless the taxpayer’s purchase price falls below 99% of the stablecoin’s redemption value. In other words, as long as the stablecoin holds its peg within a 1% band, spending it triggers no tax consequences. The acquirer’s cost basis in any stablecoin received through an exchange is deemed to be one dollar. Transaction costs incurred in facilitating stablecoin payments are excluded from basis calculations.
To qualify for this treatment, the stablecoin must be regulated under the GENIUS Act and maintain its value within 1% of $1.00. This ties the tax framework directly to the stablecoin regulatory structure already moving through Congress, creating a linked legislative approach where compliance under one law unlocks benefits under the other.
The bill also addresses two other areas of crypto taxation. It extends wash sale rules — which currently apply to stocks and bonds but not digital assets — to crypto, closing a loophole that allowed traders to sell at a loss for a tax deduction and immediately repurchase the same asset. Additionally, it introduces a distinction between passive staking rewards and active trading, giving stakers the option to pay tax upon receipt or defer for up to five years.
The proposal is still a draft and has not been enacted. But the shift from a narrow dollar-amount exemption to a broad peg-based rule signals that lawmakers are increasingly thinking about stablecoins as functional payment instruments rather than speculative assets. If the bill passes alongside the GENIUS Act, it would remove one of the most significant friction points preventing stablecoins from competing with traditional payment rails in everyday commerce.