Senate bill would exempt stablecoin payments and crypto fees of $10 or less from tax

U.S. Sen. Steve Daines, a Montana Republican, introduced the ADAPT Act (Aligning Digital Assets with Principles of Taxation Act) on Sept. 30, a bill that would end the rule making a cup of coffee bought with a dollar stablecoin a taxable event, and posted a section-by-section summary on his X account. Sens. Tim Scott, Cynthia Lummis and Bernie Moreno are cosponsors.

"Digital assets have moved into the mainstream, but the tax code hasn’t kept up."

U.S. Sen. Steve Daines

Daines said the bill would set clearer rules for stablecoins, network fees, staking and lending, while extending wash sale and constructive sale rules to digital assets.

No more gain-or-loss math for coffee

Under current law, spending a dollar stablecoin on goods is a taxable event that must be tracked and reported, even when the gain or loss is a fraction of a penny, according to the summary Daines released. Section 2 provides that no gain or loss is recognized when taxpayers use GENIUS Act-regulated U.S. dollar stablecoins that hold their $1.00 peg to buy goods and services. The GENIUS Act is the U.S. stablecoin law. These transactions would also be exempt from broker information reporting. The rule covers only purchases of goods and services, and trader and dealer activity is excluded.

Fees paid in crypto get similar treatment. Under Section 11, no gain or loss is recognized when a digital asset is used to pay network, gas or other transaction fees of $10 or less per transaction, with reporting relief for brokers. Traders, dealers, validators, users with more than 5,000 transactions a year and transactions structured to qualify are excluded.

Selling at a loss and buying right back

The bill is not all relief. Section 7 applies the wash sale rule, long used for stocks, to digital assets. The rule stops investors from selling at a loss and immediately buying back to claim a tax deduction. Economically equivalent tokenized and bridged assets would be treated as substantially identical. Regulated stablecoins, staking and mining rewards, and mark-to-market positions are excepted, and the rule applies only after enactment.

Section 9 applies the constructive sale rule, so investors cannot lock in gains through offsetting positions such as short sales while deferring tax. Regulated stablecoins are excluded, and transactions entered into before enactment are protected. Section 3 lets digital asset dealers and traders elect mark-to-market accounting, as dealers in securities and commodities can.

From ETF staking to DAO redomiciling

Several provisions deal with staking. Section 8 codifies that SEC-regulated exchange-traded trusts may stake a single proof-of-stake asset through unrelated providers without losing their tax status as passive investment trusts. Section 4 sources staking and mining income by the residence of the recipient: U.S.-source for U.S. persons and foreign-source for foreign persons. Section 12 excludes passive staking income of pensions, endowments, foundations and IRAs from the unrelated business income tax.

Section 14 directs the Treasury to issue guidance within 12 months on how foreign foundations set up for decentralized autonomous organizations (DAOs) can reorganize as U.S. corporations. Section 15 defines widely traded digital assets using a $500 million market capitalization and liquidity standard, and Section 10 exempts gifts of such assets from the qualified appraisal requirement.

A Senate bill two weeks after the House committee vote

The House Ways and Means Committee approved the Digital Asset Tax Certainty Act (H.R. 10357) on Sept. 16. In a press release, the committee said the bill applies the wash sale and constructive sale rules, clarifies the tax treatment of mining and staking and sets up a voluntary disclosure program for digital assets. According to the industry group Crypto Council for Innovation (CCI), the committee vote was 38-5, and the full House has not yet voted.

In a post on Oct. 2, CCI said the ADAPT Act gives the Senate a companion track and that "digital asset tax reform now has a path for inclusion in an end of year legislative package." The Senate bill still needs review by the Senate Finance Committee. If enacted as written, most provisions would apply to taxable years or transactions after Dec. 31, 2026, while the wash sale, constructive sale, staking and mining income sourcing, and lending provisions would apply from enactment.