Senator Daines proposes crypto tax rules for stablecoins and wash sales

Republican Senator Steve Daines of Montana released the proposed Aligning Digital Assets with Principles of Taxation Act, or ADAPT Act, on Wednesday. Senators Lummis, Moreno and Tim Scott also sponsor the bill. Daines said the tax code has not kept pace with digital assets. Daines said the bill would clarify rules for stablecoins, network fees, staking and lending. The bill proposes that spending a qualifying dollar stablecoin on goods or services would not trigger a taxable gain or loss. Brokers would not have to report those transactions. A stablecoin would qualify only if it was issued under the GENIUS Act framework and appeared on a quarterly Treasury list of coins that stayed within 3% of $1.00. The user must also have bought the stablecoin within 3% of $1.00. Crypto network or gas fees would be tax-free dispositions if fees for a transaction totaled $10 or less, subject to rules against splitting transactions to evade the limit. The bill would apply wash sale rules to crypto for the first time. Those rules prevent investors from claiming a tax loss when they sell an asset and buy it back within 30 days. The proposed rules would cover traded digital assets other than qualifying stablecoins. Assets bought before the bill becomes law would be grandfathered. Staking rewards, mining rewards and regular recurring purchases would be exempt. Tokenized stocks would count as substantially identical to their underlying shares. The Clarity Act collapsed in the Senate last month. One day later, the House Ways and Means Committee overwhelmingly approved separate legislation to change cryptocurrency tax treatment. The ADAPT Act now heads to a committee that must approve it before a full Senate vote.