Senate tax bill frees stablecoin spending while Bitcoin stays on IRS forms

A payment can produce a gain, a loss, or a break-even result, and the IRS uses a cup of coffee as its own example. A $5 Bitcoin purchase with an allocated basis of $3 produces a $2 capital gain that belongs on the return.

What qualifies as a covered stablecoin

New section 1034 of the tax code would treat the disposition of covered payment stablecoins to buy products or services as a nonrecognition event. The relief covers gain or loss on the token itself, and sales taxes and other purchase obligations stay in place.

The token must be a qualified US dollar stablecoin, meaning one issued by a permitted payment stablecoin issuer under the $GENIUS Act.

A foreign issuer qualifies through OCC registration or a Treasury finding that its home regime is comparable. It must appear in Treasury's most recent report before the payment, and the taxpayer must have acquired it at a price within 3% of $1.00.

Treasury would publish that report at least every three months, listing each qualified stablecoin actively traded within 3% of $1.00 during the 12 months ending the prior month. Users and payment companies would check the latest list when making a purchase.

Traders, brokers, and dealers in qualified dollar stablecoins are excluded, along with taxpayers using a functional currency other than the dollar, and Treasury could extend the trade-or-business exclusion to similar businesses.