A Senate Bill Would Make Small Stablecoin Purchases Tax-Free and Close Crypto's Wash-Sale Loophole. What Changes for Bitcoin and XRP Holders?

Congress is pushing to reshape crypto taxes in two significant ways, and Bitcoin and XRP holders could feel the squeeze before year-end. One proposed change might cost some investors a tax strategy they have relied on for years.

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Senator Steve Daines of Montana has introduced a comprehensive 56-page crypto tax bill that aims to make small stablecoin purchases tax-free. The bill also seeks to prevent holders of Bitcoin (CRYPTO:BTC) and XRP (CRYPTO:XRP) from claiming tax losses when they sell and immediately buy back their coins. This initiative is backed by Senate Banking Committee Chair Tim Scott, as well as Senators Cynthia Lummis and Bernie Moreno.

Daines had previously circulated a draft of the bill the week before its official introduction, following the advancement of a similar crypto tax bill by the House Ways and Means Committee in September. So, what aspects of this crypto tax bill could impact Bitcoin and XRP holders the most?

The Senate Crypto Tax Bill Would Make Small Stablecoin Purchases Tax-Free

Currently, the IRS treats cryptocurrencies as property, meaning that using a coin to buy goods counts as a sale. For instance, if someone spends a stablecoin that has increased in value by a fraction of a cent, they’ve technically made a taxable gain and must report it on their tax return.