Senate bill exempts dollar stablecoin purchases from gains

A 56-page Senate draft titled the Aligning Digital Assets with Principles of Taxation Act, released Sept. 30 by Sen. Steve Daines, would treat spending certain U.S. dollar stablecoins as nonrecognition events for federal tax purposes. Sens. Cynthia Lummis, Bernie Moreno and Tim Scott are listed as cosponsors.

Under new Section 1034, a covered payment stablecoin used to buy goods or services would not trigger gain-or-loss reporting on the token itself. The change would not affect sales taxes or other purchase obligations.

Eligible tokens must be qualified U.S. dollar stablecoins issued by permitted payment stablecoin issuers as defined in the GENIUS Act. Foreign issuers could qualify if they register with the Office of the Comptroller of the Currency or if Treasury finds the issuer’s home regulatory regime comparable.

Treasury would publish a list of qualified stablecoins at least every three months. A token must have traded within 3% of $1.00 during the 12 months ending the prior month to appear on the list, and the taxpayer must have acquired the token at a price within 3% of $1.00. Users and payment companies would check Treasury’s latest list before completing a purchase. Traders, brokers and dealers in qualified dollar stablecoins are excluded, as are taxpayers with a functional currency other than the dollar and certain trade-or-business activity that Treasury could expand by rule. Taxpayers would be required to keep records separating eligible payments from other transactions.

The bill narrows broker reporting for covered payments by exempting those transactions from certain information-return requirements under section 6045(i)(1). Brokers could rely on customer certifications and would not be required to verify the 3% acquisition test for tokens purchased elsewhere. The stablecoin provision would apply to transactions entered into on or after Jan. 1, 2027.

The draft preserves existing tax treatment for Bitcoin and other nonqualified tokens: payments with those assets would remain taxable dispositions under current IRS guidance. The text also creates a limited exception in Section 1044 for digital-asset transaction fees. Coins spent solely to pay base, gas and priority fees would escape gain-or-loss recognition when the aggregate value of assets used for those costs is $10 or less, with related transactions aggregated. That fee carve-out excludes traders, brokers and dealers, businesses that batch or validate transactions for others, assets accounted for under mark-to-market rules, and taxpayers who initiated more than 5,000 digital-asset transactions in the prior taxable year. The fee exception would also take effect on Jan. 1, 2027.

The draft would exempt qualified dollar stablecoins from wash-sale and constructive-sale rules that the bill extends to other digital assets.

Earlier legislative proposals took a value-based approach, proposing dollar thresholds such as $200 or $300 below which transactions would avoid gain reporting. The House has a separate proposal that pairs a stablecoin redemption-value accounting approach with a $10 fee relief and advanced out of committee in September.

The bill leaves technical implementation details to Treasury, including the quarterly list, recordkeeping rules and broker reporting procedures. It relies on issuer definitions in the GENIUS Act, so which tokens ultimately qualify will depend on later issuer approvals. Until any law is enacted, current IRS treatment applies: for example, a $5 coffee paid with a qualifying dollar stablecoin would not require gain reporting under the draft, while the same purchase made with Bitcoin would still require cost-basis and gain-or-loss reporting.