U.S. Senator Steve Daines has introduced a new 56-page proposal aimed at creating clearer tax rules for the growing digital asset market.
The Aligning Digital Assets with Principles of Taxation Act (ADAPT Act) will apply existing tax principles to cryptocurrency while adding specific rules for activities that are unique to blockchain technology.
Daines, a Republican from Montana and member of the Senate Finance Committee, has been working on a digital asset tax framework for more than a year.
He outlined the approach during a July Senate Finance Committee hearing, saying the goal was to combine existing tax principles with rules designed for blockchain transactions.
Stablecoin Payments Could Get Major Tax Relief
One of the bill’s main provisions focuses on the use of stablecoins for everyday payments. Under the proposal, taxpayers generally would not have to recognize a capital gain or loss when using qualifying U.S. dollar stablecoins to purchase goods and services.
The exemption would apply only when specific conditions in the legislation are met. Traders and dealers would not qualify for relief. The bill would also provide an exemption from certain broker information-reporting requirements for qualifying consumer transactions.
The proposal comes as lawmakers in both chambers to consider ways to reduce tax complications surrounding digital assets used for routine payments.
Crypto Trading and Blockchain Activities Face New Rules
The ADAPT Act would bring several cryptocurrency transactions under tax rules that already apply to traditional financial assets.
Its provisions would extend wash-sale restrictions to digital assets, limiting the ability to claim a loss when substantially identical assets are acquired around the time of a sale. Constructive-sale rules would also be extended to digital assets, with regulated stablecoins excluded from that provision.
The bill would address other areas of blockchain activity as well. It establishes income-sourcing rules for staking and mining, while certain qualifying digital-asset loans could receive treatment similar to securities lending.
It would also exclude gain or loss on digital assets used to pay network, transaction or gas fees of $10 or less, subject to restrictions for traders, dealers and certain high-volume users.
Senate and House Take Separate Paths
Daines’ proposal follows a separate digital asset tax package advanced by the House Ways and Means Committee.
The House measure also covers stablecoin transactions, wash-sale rules, mining, staking, lending and small network-fee payments. Although the two proposals overlap in several areas, they remain separate pieces of legislation.
Daines’ bill would also establish rules for areas such as mark-to-market accounting, foreign digital asset trading and charitable contributions.
