Washington isn’t trying to solve every crypto policy fight at once, but it appears to be charting a workable path for one specific category of digital assets: the regulated, dollar-pegged stablecoin.
The GENIUS Act created the first federal regulatory framework for stable payment coins, and a bipartisan tax debate bill in the House of Representatives now proposes friendlier tax treatment for those same tokens when people actually use them.
Together, the two efforts point toward a purposeful, stablecoins-first lane in U.S. crypto policy that could reshape how users, merchants, and issuers interact with digital dollars in the years to come.
What the stablecoin tax design actually proposes
The bill is the Digital Asset PARITY Act, a bipartisan debate bill first released in December 2025 by Representatives Max Miller (R-Ohio) and Steven Horsford (D-Nevada), both members of the House Ways and Means Committee. An updated version was re-released on March 26, 2026, with significant revisions to the core stablecoin provision.
Under the revised March draft, profits from the sale of a “regulated payment stablecoin” would generally not be included in gross income, and losses would not be recognized unless the taxpayer’s basis in the token falls below 99% of its redemption value.
For exchanges, the recipient would take a deemed basis of $1. To qualify, the stablecoin must have been issued by a permitted stablecoin payment issuer under the GENIUS Act, pegged only to the US dollar, and have demonstrated tight price stability over the previous 12 months. Brokers and dealers are excluded.
For regular people, this means that issuing an eligible dollar stablecoin no longer triggers a small, annoying tax event every time the token’s value drops by a fraction of a cent.
The design seeks to give stable, regulated dollar tokens the kind of practical flexibility that cash already enjoys, rather than subjecting every micro-fluctuation to the capital gains framework applied to volatile crypto assets.
This is a limited exception for tokens that, by design and regulation, behave as digital representations of the dollar.
Why the GENIUS Act is the foundation
The tax design cannot be understood in isolation, as its scope is explicitly tied to the regulated stablecoin category that the GENIUS Act already created.
That law, which passed the Senate 68-30 and the House 308-122 with substantial bipartisan support, established who can issue stablecoins for payments in the United States, what reserves they must maintain, and what compliance obligations they must meet. It requires 100% reserve coverage with liquid assets, subjects issuers to Bank Secrecy Act obligations and mandates a variety of anti-money laundering and sanctions compliance programs.
The regulatory machinery behind this new design is already in motion.
The OCC proposed implementing rules in early March 2026, covering standards for reserves, capital, liquidity and risk management. The Treasury Department and FinCEN/OFAC followed in April with a joint proposed rule establishing anti-money laundering and sanctions compliance requirements for permitted stablecoin issuers. The FDIC has also begun establishing application procedures for FDIC-supervised institutions seeking to issue stable payment coins through subsidiaries.
The explanatory memorandum to the tax draft acknowledges that the narrow focus on regulated payment stablecoins follows existing law, specifically citing the GENIUS Act.
Congress appears to be building in order: first define the legal stablecoin, then make it practical to use.
No stablecoin issuer has yet received the formal status of “permitted stablecoin payment issuer” as the regulatory mechanism is still under construction and final implementation rules are not required until July 2026.
But the leading candidates are already visible.
Circle’s USDC is the clear frontrunner: the company already publishes monthly reserve statements verified by a Big Four accounting firm, maintains reserves in US Treasuries and cash at regulated banks, and operates under existing government money transfer licenses. It is widely expected that USDC will meet GENIUS Act compliance requirements without major structural changes.
Instead of restructuring USDT for US compliance, Tether took a different route by launching USA₮ in January 2026 through Anchorage Digital Bank, creating a separate US token rather than restructuring its offshore flagship.
The GENIUS Act also opened a door that previously did not exist for traditional banks.
Any FDIC-insured institution can now apply to issue stablecoins for payments through a subsidiary, and some major players are already exploring that avenue. JPMorgan’s blockchain unit Kinexys has developed a deposit token aimed at institutional on-chain settlements, and Bank of America has publicly described stablecoin regulation as the start of a multi-year shift to on-chain banking.
If these efforts produce tokens that qualify under the GENIUS Act framework, they would also qualify for the PARITY Act’s proposed tax treatment. While it is unlikely that these bank-issued stablecoins will see the kind of volumes that USDC and USDT have, it is still a significant change for the stablecoin market that has been dominated by crypto-native issuers since its inception.
What this means for users, sellers and publishers
The benefit this will have for users is a simple reduction in friction.
Under the current framework, any sale or exchange of digital assets can generate a reportable gain or loss, no matter how trivial.
The draft of the PARITY Act is intended to remove that burden for eligible regulated dollar stablecoins, because small fluctuations in value around $1 would generally no longer be a tax issue.
If the token stays close enough to its peg and the user acquired it near $1, the special rule applies. If the token breaks away from the peg and the transaction occurs outside that narrow band, this will not happen.
The benefit for sellers is easier adoption. A payment method works better when customers don’t feel like every transaction poses an accounting problem, and stablecoins have struggled with that perception in the US for years.
If tax treatment becomes simpler for customers, merchants will have one less obstacle when considering stablecoin adoption.
But issuers would likely be the ones to benefit the most, as this combination of underwriting and regulation could be quite transformative.
The GENIUS Act provides the rulebook: permitted issuers know what reserves they need, what compliance programs they must implement, and what regulators expect.
But a stablecoin issuer’s business model only works if people actually own and spend the token. If the tax bill passes, compliant issuers would have a significantly stronger argument that their tokens are practical to use in everyday U.S. commerce, and that the distinction between regulatory permission and real-world usability is precisely where the commercial value lies.
However, it is important to note that a discussion draft is not a law. It is much closer to a public working version of a bill, released by lawmakers to set policy direction, solicit feedback, and test political support before formal legislative moves.
The PARITY Act still contains explanatory notes and unfinished technical provisions, showing that the policy ideas behind it are real, but the legislative language is still being refined. Representatives Miller and Horsford said they plan to introduce the draft as a formal bill, and there has been discussion about crypto tax provisions that might fit into a broader reconciliation package, but passage is not guaranteed.
The design shows where influential lawmakers want policy to go, and discussion designs can carry political weight without becoming law quickly, if at all.
What happens to stablecoins anyway?
If the PARITY Act’s stablecoin provision becomes law, it would truly make certain regulated dollar stablecoins easier to use in routine transactions in the U.S. economy. The bill text indicates that the provision would apply to tax years beginning after December 31, 2025.
If it fails, it will most likely not have a negative impact on stablecoins.
The GENIUS Act is already law and implementation is going through the Treasury Department, the OCC, the FDIC, and FinCEN. Issuers would still have a federal regulatory framework to operate within, and infrastructure buildout would continue.
What would be missing is the tax simplification layer for users and businesses. The US could still become a regulated stablecoin market without becoming a user-friendly stablecoin payments market.
The system would provide legal options for issuers, but retail users and merchants would continue to face the kind of tax ambiguity that discourages routine adoption.
Without the tax break, the country could regulate stablecoins faster than normalizing their use.
That tension is currently the central question in American stablecoin policy. The country has already defined what a legal stablecoin is and who can issue one. What remains undecided is whether these regulated dollar stablecoins will sit on a regulatory shelf as licensed financial products or function as everyday digital dollars that people and businesses can use without hesitation.
The GENIUS Act built the framework. The tax bill, if it ever becomes law, would bridge the gap between regulation and routine use, and that gap is precisely where the future of U.S. stablecoin payments will be decided.