Duty-free exchange of stable currency is restricted: US House of Representatives pushes for crypto tax reform to increase net revenue by 500 million

According to Woofun AI, the US House Finance Committee is scheduled to review the “Digital Asset Tax Certainty Act” (H.R. 10357 bill) on September 16. The aim is to increase the federal government's net revenue of about 500 million US dollars in the 2027-2036 fiscal year while improving ease of use through restructuring the crypto asset tax framework.

The core logic of the bill is to obtain broader regulatory compliance through precise tax relief. Among them, special treatment for US dollar stablecoins is a key part of the burden reduction measures. Lawmakers are trying to solve the complicated tax problems caused by small fluctuations in the fixed value of $1 to taxpayers. They stipulate that for eligible transactions of US dollar stablecoins that meet the standards within the fixed value range, the tax calculation basis and amount of income will be based on the redemption value, thus avoiding the need to calculate gains or losses every time tokens are used.

However, this offer is not inclusive; traders, brokers, dealers, and users who have completed more than 5,000 recorded transactions are excluded, as well as taxpayers that use a currency other than the US dollar as the currency of account. In addition, the bill also introduces an exemption mechanism for small network or transaction fees (such as blockchain gas fees), and the benefits or losses generated when using digital assets to pay no more than $10 in associated fees are not taken into account.

Notably, this rule will take effect for transactions after December 31, 2027, and will only apply to the transaction fee itself, not purchases made using Bitcoin or other cryptocurrencies, which are still subject to taxation in the current way digital assets are treated as property.

According to data compiled by Woofun AI, although these burden reduction measures are aimed at removing tax barriers to everyday transactions, the Joint Committee on Taxation estimates that the small fee relief alone would reduce federal government revenue by $2.365 billion by 2036, making it one of the most costly provisions in the bill. Cryptocurrency tax attorney Andrew Gordon commented on this, saying that for investors seeking clear rules, this is a huge step forward. After all, clear rules are a prerequisite for tax payment.

In order to make up for the huge revenue gap brought about by the above burden-reduction measures, the bill adopted stricter regulatory measures on the revenue side, focusing on eliminating the long-term tax advantages that cryptocurrency investors have enjoyed over time compared to stock traders. First, the laundering rules were extended to other tradable digital assets other than standard-compliant US dollar stablecoins. Under current rules, investors can sell Bitcoin at a loss and immediately buy back the same amount of assets and deduct taxes, because the laundering rules mainly target stocks and securities; while Act H.R. 10357 will restrict this operation and include encapsulated and processed versions of digital assets within the scope of control. The Joint Committee on Taxation estimates that this change will add $17.07 billion in revenue for the federal government during the budget cycle. Second, the bill expands the scope for digital asset traders and dealers engaged in commercial or trade-related activities to use the Market Capitalization Act for accounting, which is expected to increase the government's revenue by $2.32 billion by 2036. Together, these two transaction-related measures are expected to generate more than $4 billion in revenue, effectively hedging the impact of tax relief.

In addition, the bill also extends the tax treatment of securities lending to eligible digital asset lending businesses, eliminating the question of whether temporary cryptocurrency transfers constitute taxable sales. As long as the requirements for returning equivalent assets are met and are economically reasonable, there is usually no need to immediately confirm gains or losses. For investment trusts, the Act prevents them from losing their preferential tax status due to trustees pledging digital assets, and removes barriers to investment products receiving pledge rewards.

However, for individual miners and pledgers, the scope of the proposal is limited. Verification proceeds are still treated as ordinary income, and the current time frame is retained, that is, the income is recognized when the taxpayer gains control over the pledge rewards, and the industry's proposal to defer tax payment until the time of sale is not adopted.

In terms of compliance remedies, the US Treasury will be required to establish a voluntary digital asset disclosure program that allows eligible taxpayers to correct past tax return information, pay unpaid taxes and interest, and may be exempted from certain penalties to provide a way out for those with historical filing issues. This Wednesday's draft review is the first opportunity to test whether these compromises can be preserved. Committee members can amend the bill before voting. Even if authorized, Bill H.R. 10357 would still have to be voted on by all members of the House of Representatives, reviewed by the US Senate, and approved by the President. Any changes to the laundering rules, fee provisions, or stablecoin provisions during the draft review phase could change the Joint Tax Committee's estimate of a net revenue increase of $500 million, forcing legislators to make more difficult choices between tax relief and fiscal balance. The article “The US Congress Wants to Make Cryptocurrency Easier to Use While Raising Another $500 Million in Taxes” was originally published on the CryptoSlate website.