Congress nearing approval of regulated dollar stablecoins to function similarly to digital currency.

Washington is not attempting to address every cryptocurrency policy issue simultaneously; however, it seems to be establishing a feasible approach for a particular type of digital asset: the regulated, dollar-pegged stablecoin.

The GENIUS Act created the initial federal regulatory framework for payment stablecoins, and a bipartisan House tax discussion draft now suggests more favorable tax treatment for these tokens when utilized.

Collectively, these initiatives indicate a purposeful, stablecoins-first approach in U.S. cryptocurrency policy that could transform how users, merchants, and issuers engage with digital dollars in the future.

Details of the stablecoin tax draft

The draft legislation is the Digital Asset PARITY Act, a bipartisan discussion draft initially 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 reissued on March 26, 2026, featuring significant changes to its primary stablecoin provision.

In the revised March draft, profits from the sale of a “regulated payment stablecoin” would generally not be counted as gross income, and losses would not be acknowledged unless the taxpayer’s basis in the token drops below 99% of its redemption value.

For exchanges, the recipient would assume a deemed basis of $1. To qualify, the stablecoin must be issued by an authorized payment stablecoin issuer under the GENIUS Act, be pegged solely to the U.S. dollar, and demonstrate consistent price stability over the preceding 12 months. Brokers and dealers are excluded.

For everyday users, this implies that spending a qualifying dollar stablecoin could prevent the triggering of a minor, bothersome tax event each time the token’s value fluctuates slightly.

The draft aims to provide stable, regulated dollar tokens with the practical flexibility that cash currently enjoys, rather than subjecting every minor fluctuation to the capital gains framework applied to volatile crypto assets.

This represents a specific exemption for tokens that, by design and regulation, function as digital representations of the dollar.

Importance of the GENIUS Act

The tax draft cannot be viewed in isolation, as its scope is explicitly linked to the regulated stablecoin category established by the GENIUS Act.

This legislation, which passed the Senate 68-30 and the House 308-122 with considerable bipartisan backing, defined who is authorized to issue payment stablecoins in the United States, the reserves they must maintain, and the compliance obligations they must fulfill. It mandates 100% reserve backing with liquid assets, subjects issuers to Bank Secrecy Act requirements, and enforces various anti-money-laundering and sanctions compliance programs.

The regulatory framework supporting this new draft is already in motion.

The OCC proposed its implementing rules in early March 2026, outlining standards for reserves, capital, liquidity, and risk management. Treasury and FinCEN/OFAC followed in April with a joint proposed rule establishing anti-money-laundering and sanctions compliance requirements for authorized payment stablecoin issuers. The FDIC has also begun to outline application procedures for FDIC-supervised institutions seeking to issue payment stablecoins through subsidiaries.

The explanatory notes of the tax draft recognize that its narrow focus on regulated payment stablecoins aligns with existing statute, specifically referencing the GENIUS Act.

Congress seems to be progressing sequentially: first defining the legal stablecoin, then making it practical for use.

No stablecoin issuer has yet received formal “permitted payment stablecoin issuer” status, as the regulatory framework is still being developed, and final implementing rules are not due until July 2026.

However, the leading candidates are already apparent.

Circle’s USDC is the most prominent frontrunner: the company publishes monthly reserve attestations verified by a Big Four accounting firm, maintains reserves in U.S. Treasuries and cash at regulated banks, and operates under existing state money transmitter licenses. USDC is widely anticipated to comply with GENIUS Act requirements without significant structural changes.

Instead of restructuring USDT for U.S. compliance, Tether opted for a different approach by launching USA₮ in January 2026 through Anchorage Digital Bank, creating a separate U.S.-compliant token rather than modifying its offshore flagship.

The GENIUS Act also opened a pathway that did not previously exist for traditional banks.

Any FDIC-insured institution can now apply to issue payment stablecoins through a subsidiary, and some major players are already exploring this option. JPMorgan’s blockchain division Kinexys has been developing a deposit token aimed at institutional on-chain settlements, while Bank of America has publicly characterized stablecoin regulation as the start of a multi-year transition toward on-chain banking.

If these initiatives yield tokens that qualify under the GENIUS Act’s framework, they would also be eligible for the PARITY Act’s proposed tax treatment. While it is unlikely that these bank-issued stablecoins would achieve the same volumes as USDC and USDT, it still represents a significant shift for the stablecoin market, which has been predominantly led by crypto-native issuers since its inception.

Implications for users, merchants, and issuers

The advantage this will provide for users is a clear reduction in friction.

Under the current framework, every sale or exchange of a digital asset can result in a reportable gain or loss, regardless of how minor.

The PARITY Act draft aims to eliminate that burden for qualifying regulated dollar stablecoins, as minor value fluctuations around $1 would generally cease to be a tax issue.

If the token remains sufficiently close to its peg and the user acquired it near $1, the special rule would apply. If the token deviates from the peg and the transaction occurs outside that narrow range, it would not.

The benefit for merchants is more straightforward acceptance. A payment method functions more effectively when customers do not perceive that every transaction creates an accounting challenge, and stablecoins have faced that perception in the U.S. for years.

If the tax treatment becomes simpler for customers, merchants will encounter one less barrier when considering stablecoin adoption.

However, issuers are likely to gain the most from this combination of acceptance and regulation, which could be quite transformative.

The GENIUS Act provides the regulatory framework: permitted issuers understand the reserves they need, the compliance programs they must implement, and the expectations of regulators.

Nonetheless, a stablecoin issuer’s business model only succeeds if people actually hold and utilize the token. If the tax draft is enacted, compliant issuers would have a significantly stronger argument that their tokens are practical for everyday American commerce, and that distinction between regulatory approval and real-world usability is precisely where the commercial value lies.

It is essential to recognize that a discussion draft is not law. It is much closer to a public working version of a bill, released by lawmakers to indicate policy direction, invite feedback, and gauge political support before formal legislative action.

The PARITY Act still includes explanatory notes and incomplete technical provisions, indicating that the policy concepts behind it are genuine, but the legislative language is still being refined. Representatives Miller and Horsford have stated their intention to introduce the draft as a formal bill, and there has been discussion about crypto tax provisions potentially fitting into a broader reconciliation package, but passage is not assured.

The draft illustrates where influential lawmakers wish policy to progress, and discussion drafts can carry political significance without becoming law quickly, or at all.

Future of stablecoins regardless of outcome

If the PARITY Act’s stablecoin provision is enacted, certain regulated dollar stablecoins would become genuinely easier to use in everyday transactions throughout the U.S. economy. The bill text indicates that the provision would apply to taxable years beginning after December 31, 2025.

If it does not succeed, it is unlikely to have any adverse effects on stablecoins.

The GENIUS Act is already law, and implementation is progressing through Treasury, the OCC, the FDIC, and FinCEN. Issuers would still operate under a federal regulatory framework, and the infrastructure development would continue.

What would be absent is the tax simplification layer for users and businesses. The U.S. could still evolve into a regulated stablecoin market without becoming a user-friendly stablecoin payment market.

The system would have legal frameworks for issuers, but retail users and merchants would continue to face the kind of tax uncertainty that hinders routine adoption.

Without the tax component, the country may regulate stablecoins more swiftly than it normalizes their use.

This tension encapsulates the central question in American stablecoin policy at present. The country has already defined what constitutes a legal stablecoin and who can issue one. What remains unresolved is whether those regulated dollar stablecoins will exist as licensed financial products on a regulatory shelf or function as everyday digital dollars that individuals and businesses can use without hesitation.

The GENIUS Act established the framework. The tax draft, if it eventually becomes law, would bridge the gap between regulation and everyday use, and that gap is precisely where the future of American stablecoin payments will be determined.

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