Senator Steve Daines is advancing a digital asset tax reform bill designed to simplify how the Internal Revenue Code treats cryptocurrency transactions. The Montana Republican's draft legislation pairs tax relief for everyday users with new restrictions on a common trading strategy.
The bill circulated the week of September 23-25, 2026, with formal introduction expected the following week. It includes 13 sections addressing various aspects of crypto taxation.
Key Provisions
The headline provision creates a new tax exemption for stablecoin payments. Under the draft, transactions involving stablecoins pegged at or near $1 would not trigger gain or loss recognition if the tokens remain worth approximately their peg value. This exemption would apply to transactions after December 31, 2026.
A second provision exempts network fees of $10 or less per transaction from gain or loss reporting requirements.
The bill also extends wash-sale rules to most digital assets, excluding qualified stablecoins. Wash sales occur when an investor sells an asset at a loss, claims the loss for tax purposes, then immediately repurchases the same asset. This strategy has long been prohibited for stock investors but has remained available to crypto holders.
Additional technical provisions include mark-to-market election options for certain taxpayers, source rules clarifying where staking and mining income is considered earned, and safe harbors for foreign investors.
Alignment with House Effort
The Senate initiative follows the House Ways and Means Committee's advancement of the Digital Asset Tax Certainty Act on September 16, 2026. The House committee voted 38-5 in favor of H.R. 10357, and the Senate draft is designed to align with that legislation.
Daines has signaled this legislative direction for months. In July 2026, he emphasized the need for tax-code updates that reduce complexity.
Background on Current Crypto Taxation
The complexity in crypto taxation stems from IRS Notice 2014-21, which classified digital assets as property rather than currency. This classification means every transaction—trades, purchases, or fee payments—can potentially trigger taxable gain or loss calculations.
Stablecoins illustrate the practical problems. A token designed to maintain a $1 value can drift fractionally, and under current IRS treatment, these minor variations are technically reportable as taxable events.
Market Impact
For everyday users, the stablecoin and fee provisions would reduce friction when using crypto for regular payments. The effective date matters: the stablecoin exemption would apply only to transactions after December 31, 2026.
For active traders, the wash-sale extension represents a significant change, eliminating a tax strategy that equity investors have not been able to use. The final bill language will be critical, particularly regarding how qualified stablecoins are defined and the scope of wash-sale restrictions.
