US House Draft Proposes Tax Safe Harbor for Some Stablecoin Transactions

Core Insights - The Digital Asset PARITY Act aims to create a tax safe harbor for small stablecoin payments, aligning crypto taxation with consumer use [2][3] Group 1: Legislative Proposal - The proposal is introduced by bipartisan lawmakers Rep. Max Miller and Rep. Steven Horsford, both members of the House Ways and Means Committee [2] - It seeks to exempt stablecoin transactions valued under $200 from capital gains taxes, alleviating compliance burdens for routine payments [3][4] Group 2: Stablecoin Criteria - To qualify for the exemption, stablecoins must be issued by a permitted issuer under the GENIUS Act, be dollar-pegged, and maintain a trading value within 1% of $1.00 for 95% of the past year [4] - The exemption does not apply to other cryptocurrencies like Bitcoin or Ether, and brokers and dealers are excluded from the safe harbor [4] Group 3: Taxation of Rewards - The proposal addresses the taxation of staking and mining rewards, allowing taxpayers to elect a five-year deferral on these rewards instead of immediate taxation [6][7] - After the deferral period, rewards would be taxed as ordinary income based on fair market value, representing a compromise between immediate taxation and full deferral [7][8] Group 4: Consumer Focus - The draft emphasizes consumer use of stablecoins rather than investment or trading activities, with lawmakers considering an annual cap to prevent misuse of the provision for investment shielding [5][8]