Miller-Horsford Draft: $200 Stablecoin Tax Exemption, Staking Deferral, and a Wash Sale Trap

The Lede

Reps. Max Miller (R-OH) and Steven Horsford (D-NV) have circulated a bipartisan draft framework that would fundamentally alter the tax treatment of digital assets in the United States. The proposal, emerging from the powerful House Ways and Means Committee, offers two long-sought wins for the industry: a $200 de minimis exemption for stablecoin payments and a five-year tax deferral on staking rewards.

But the draft carries a significant sting in its tail for active traders: it proposes extending wash sale rules to cryptocurrencies, effectively closing the loophole that allows traders to harvest tax losses while immediately repurchasing the same asset.

The Details

The framework targets the friction of using crypto for everyday commerce. Currently, buying a coffee with USDC is a taxable event requiring capital gains reporting. Under the Miller-Horsford plan, transactions involving regulated, dollar-pegged stablecoins under $200 would be exempt from capital gains tax. Notably, this exemption is narrower than previous proposals, excluding Bitcoin or other volatile assets to focus strictly on payment utility.

The proposal offers a compromise on the taxation of rewards earned through staking and mining… giving taxpayers the option to defer taxes on those rewards for up to five years.

For proof-of-stake participants, the framework addresses the phantom income problem. Instead of being taxed upon receipt, often forcing miners and stakers to sell assets just to cover the tax bill, recipients could defer income recognition for up to five years or until the asset is sold. At that point, the rewards would be taxed as income based on their Fair Market Value (FMV).

The Institutional Context

While the headlines focus on the tax break, the structural shifts are where the market impact lies. By introducing wash sale restrictions, the bill signals Washington’s intent to treat crypto assets closer to traditional securities for tax purposes. This trade-off, usability for payments in exchange for tighter trading loopholes, aligns with the broader legislative trend of 2025, moving away from “wild west” enforcement toward integrated financial compliance.

The draft also permits eligible traders to use mark-to-market accounting, a provision that aligns crypto trading desks with traditional forex and securities operations, potentially simplifying the tax burden for high-frequency institutional players.

Market Outlook

The proposal is currently a discussion draft, not a filed bill, meaning the language will face scrutiny from both the Treasury and industry lobbyists before any committee vote. However, as the first crypto tax framework to originate specifically from Ways and Means members, it carries more weight than previous standalone bills.