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Daines's crypto tax draft pairs 2027 stablecoin relief with wash-sale limits on traders
Sen. Steve Daines's 13-section draft would stop taxing near-$1 stablecoin payments and network fees of $10 or less, while extending wash-sale rules to crypto. The relief goes to people who spend stablecoins, and the cost falls on trading desks that sell at a loss and buy straight back.
The Investor · Invest desk
What happened
- The stablecoin rule, a new Internal Revenue Code section 1034, would apply only to transactions after December 31, 2026, leaving the 2026 tax year unchanged.
- The wash-sale extension reaches most digital assets, with qualified stablecoins carved out of it.
- House Ways and Means advanced H.R. 10357, the Digital Asset Tax Certainty Act that the Senate draft is built to match, by 38 votes to 5 on September 16, 2026.
- The draft also sets source rules for where staking and mining income is earned and adds safe harbors for foreign investors.
Compiled by The InvestorSomething wrong?How this is made
Why it matters
- constraint As Crypto Briefing describes the rule, a desk keeps a harvested loss only if it does not buy the same coin straight back, the limit equity traders already work under.
- decision Payment operators get a tax reason to settle customer spending in qualifying stablecoins, since those payments would stop generating the gain-or-loss entries other tokens still create.
- precedent With 88% of voting Ways and Means members behind H.R. 10357 and a Senate text written to match it, carve-outs from the 2014 property rule look like the starting point for any final crypto tax bill.
IRS Notice 2014-21 classified digital assets as property, so every disposal, whether a trade, a purchase or a fee payment, can set off a gain or loss calculation [11]. A token built to sit at $1 drifts by a fraction of a cent, and under current treatment even that drift is technically reportable [12]. Daines stressed in July 2026 that the tax code needed updates to cut complexity [13]. Section 1034 would drop that calculation for qualifying payments near the peg [3].
The relief is narrow. As Crypto Briefing describes the draft, Section 1034 covers stablecoin payments near $1 [3]. A purchase made with any other token stays a disposal under the 2014 property rule, and only the network fee is exempted, up to $10 a transaction [5][11]. An operator settling in a non-qualifying token keeps the per-payment gain-and-loss ledger it runs today [3][11].
The wash-sale extension is where the draft costs someone money [6], and its start date is still open. Crypto Briefing's account gives a date only for the stablecoin rule [4]. If the wash-sale limit takes the same 2027 start, desks have the roughly 97 days between the draft's circulation and year end to sell losing coins and buy them straight back under current law [1]. An earlier start would shorten that window, and formal introduction was only expected the week after the draft circulated [2].
The mark-to-market election makes this harder to call for some desks. A taxpayer who makes it treats holdings as sold at fair value at year end [8], so a loss on a coin still held on December 31 is recognized with no sale, and no repurchase for a wash-sale rule to catch. The same election books unrealized gains every year [8]. The draft offers it to "certain taxpayers" [8]. Which desks count will decide whether they lose loss-harvesting outright or swap it for annual tax on paper gains.
Several outcomes would change this. A narrow qualified-stablecoin definition, a wash-sale start before 2027, or a mark-to-market election open to most active desks would each change who gains and who pays under the draft [4][6][8]. I think the wash-sale clause matters more in tax owed, because Section 1034 removes gains and losses measured in fractions of a cent [12] while the wash-sale rule removes whole deductions from traders who rebuy [7]. The counter-case runs through the definition Crypto Briefing tells traders to watch [14]. A tight definition would shrink the payment relief and, through the carve-out, put more tokens under the wash-sale rule at the same time [3][6]. If the final definition covers only some dollar-pegged tokens, the payments half of the bill reaches fewer transactions than the draft's summary implies.
What to watch
- Formal Senate introduction of the Daines bill and which senators sign on as cosponsors.
- Whether the Senate text departs from H.R. 10357 on the stablecoin definition or the scope of the wash-sale rule.
- Whether Senate leadership signals a vote before or after November, and what start date the final text gives the wash-sale extension.