Senate Proposes Tax Exemption for Stablecoin Payments and Small Network Fees

U.S. Senator Steve Daines has introduced a bill, the ADAPT Act, which aims to simplify and clarify cryptocurrency taxation. The bill, which was introduced on September 30, proposes exempting taxes on stablecoin payments and small network fees. The bill's co-sponsors include Senators Cynthia Lummis, Bernie Moreno, and Tim Scott.

The bill focuses on creating rules that taxpayers, businesses, and the U.S. Internal Revenue Service can easily understand and enforce. It also extends anti-avoidance rules applied to stocks to cryptocurrencies. The bill would allow purchases of goods or services with certain U.S. dollar-denominated stablecoins to avoid recognition of gains or losses, excluding such transactions from capital gains taxation.

The bill would also exempt brokers from information reporting obligations for transactions involving network fees, such as gas fees, if the total amount per transaction is $10 or less. However, traders, dealers, validators, high-frequency users exceeding 5,000 transactions a year, and transactions aimed only at applying the system are excluded.

Coinbase, the Blockchain Association, the Crypto Council for Innovation, Fidelity Investments, and the Digital Chamber have expressed support for the bill.