House Committee Advances Digital Asset Tax Bill: What USDT, USDC, and Crypto Holders Need to Know
The House Ways and Means Committee voted 38-5 on September 16, 2026 to advance the Digital Asset Tax Certainty Act out of committee, marking the first time a formal congressional tax framework for cryptocurrency and stablecoins has cleared this hurdle. For anyone trying to understand how crypto is taxed in the US, or who has been uncertain about their USDT tax or USDC tax obligations, this vote matters. The bill is not law yet, and its path to a full floor vote is complicated by the congressional calendar, but the provisions it contains would reshape the tax landscape for millions of American crypto holders if enacted.
What Is the Digital Asset Tax Certainty Act?
The bill was introduced by Ways and Means Committee Chair Rep. Jason Smith (R-Missouri), with bipartisan input from both Republican and Democratic members. In a statement, Smith described it as a "historic moment," noting that the committee had spent more than a year building a framework for an industry that now represents over $2 trillion of the global economy.
The legislation bundles several distinct reforms, each targeting a different pain point in the current treatment of digital assets under the Internal Revenue Code. Here is what made it through markup and what did not.
Medium-of-Exchange Relief for Stablecoins
One of the most practically significant provisions is aimed squarely at everyday crypto payments. Under current rules, spending cryptocurrency, including stablecoins like USDT or USDC, is a taxable disposal. Even a $5 coffee purchased with USDC could technically generate a reportable capital gain or loss. The bill proposes to remove that friction by treating qualifying digital assets used as a medium of exchange more like cash, bringing them closer to how traditional payment instruments are handled.
This directly addresses the USDC tax and USDT tax burden that discourages people from using stablecoins for routine transactions. The precise thresholds and qualifying criteria will matter enormously when the bill's final text is read against IRS guidance, but the direction of travel is clear: Congress wants stablecoins to function like dollars without triggering a tax event every time they change hands.
For background on how these stablecoin proposals evolved, see our earlier coverage of how the House Ways and Means stablecoin and staking tax proposals started.
Parity with Traditional Financial Assets
The bill would make digital assets eligible for two existing safe harbors already available to comparable traditional financial instruments under the Internal Revenue Code. It would also allow charitable donations of many common digital assets to qualify for the same streamlined tax rules that currently apply to publicly traded securities. That is a notable change for donors who hold appreciated crypto and want to avoid recognizing a gain at the point of donation.
Mark-to-Market Accounting for Dealers and Traders
Digital asset dealers and traders would be permitted to use mark-to-market accounting under the bill. This is the method already available to securities dealers, where gains and losses are recognized at year-end based on fair market value rather than at the point of sale. For active traders, this can simplify record-keeping and smooth out the tax profile across volatile years, though it also means recognizing unrealized gains annually, which carries its own cash-flow implications.
Wash-Sale and Anti-Abuse Rules Applied to Crypto
This is the provision that will most directly affect ordinary holders. Currently, the wash-sale rule, which bars you from claiming a loss on a security if you buy the same or a substantially identical one within 30 days before or after the sale, does not apply to cryptocurrency. Crypto traders have legally harvested losses and immediately repurchased the same asset to reset their cost basis. The bill would close that gap by extending wash-sale rules to digital assets.
Also included are constructive sale rules and anti-abuse provisions relating to financial derivatives, US territories, and foreign corporations. These are designed to prevent sophisticated structuring that could otherwise exploit gaps between how traditional finance and crypto are treated.
The practical upshot: if you've been using tax-loss harvesting strategies that rely on the absence of a crypto wash-sale rule, those strategies would no longer work if this bill becomes law. Now is a good time to review your approach before the rules change.
Voluntary Disclosure Program
The bill would direct the Treasury Department to establish a voluntary disclosure program specifically for digital assets. The program would offer reduced penalties and a clean slate for holders who come forward to correct past unreported or under-reported crypto activity. This provision acknowledges something that most tax practitioners already know: a significant number of US crypto holders have incomplete or inconsistent records from earlier years, when guidance was sparse and exchanges did not issue consistent tax forms.
If enacted, this program could be a meaningful opportunity for holders sitting on undisclosed gains or incomplete filings. The reduced-penalty structure would likely make voluntary disclosure far less painful than waiting for an IRS audit or enforcement action.
What Was Removed: The Mining and Staking Deferral
The most talked-about casualty of the markup session was the provision that would have clarified the tax treatment of crypto mining and staking rewards, including sourcing and character rules. It was also designed to make it easier for exchange-traded investment products to engage in staking without jeopardizing their tax status.
That language was stripped out during the markup after the American Bankers Association and other banking industry voices raised objections. ABA president and CEO Rob Nichols praised the removal, stating that taxing similar income the same way regardless of the asset that produces it is a "bedrock principle of a fair Tax Code."
What that means for stakers: the existing uncertainty about how to report staking rewards, whether as ordinary income at receipt or deferred until sale, remains unresolved. The IRS position articulated in Revenue Ruling 2023-14 still stands as the operative guidance, treating staking rewards as ordinary income when received. For a detailed look at what the removal means for your position, see our piece on what the staking and mining deferral removal means for your crypto tax.
The Other Bills Advanced the Same Day
EFIN Verification Act
Also advanced by the committee was the EFIN Verification Act, introduced by Reps. Ron Estes (R-Kansas) and Jimmy Panetta (D-California). It targets a specific and growing fraud vector: criminals using stolen or compromised Electronic Filing Identification Numbers to file fraudulent tax returns in other people's names. The bill would require tax software to verify in real time that an EFIN is active and authorized before enabling e-file functionality. This is a procedural safeguard rather than a tax code change, but it matters to anyone who relies on a tax preparer, because it adds a layer of verification before your return can be submitted.
FULL HOUSE Act: Gambling Loss Deductibility
The third bill, the Facilitating Useful Loss Limitations to Help Our Unique Service Economy (FULL HOUSE) Act, addresses gambling losses. The One Big Beautiful Bill Act had reduced the deductibility of gambling losses from 100% to 90% of winnings, creating a situation where taxpayers could owe tax even when they broke even or lost money. The FULL HOUSE Act would restore the full 100% deductibility up to the amount of winnings. This passed 38-5 with bipartisan support and backing from the gambling industry. It is less directly relevant to crypto holders, though there is an argument that the treatment of speculative gains and losses in one area of the tax code can set precedents that ripple elsewhere.
What Happens Next, and Why the Timeline Is Uncertain
A committee vote is not the same as becoming law. The Digital Asset Tax Certainty Act still needs to pass the full House, then the Senate, before reaching the President's desk. That path is currently obstructed by the congressional calendar. House Speaker Mike Johnson canceled Thursday's session on September 17, sending lawmakers home early to campaign ahead of the midterm elections. Congress is not expected to reconvene until the second week of November.
The broader crypto regulatory picture got more complicated the same week: the CLARITY Act, a higher-profile bill that would have divided regulatory oversight of crypto between the SEC and CFTC, failed to overcome a procedural hurdle in the Senate despite intensive lobbying by the crypto industry. Its failure to advance may effectively doom it for the current congressional term.
Smith and other backers acknowledge the bills advanced by Ways and Means are unlikely to pass both chambers before the end of the current term. The expectation is that they will be reintroduced in the next Congress. That is relevant for tax planning purposes: whatever you file for the 2026 tax year will almost certainly be governed by current law, not this bill. But the legislative momentum is real, and the specific provisions that survived markup, particularly the stablecoin medium-of-exchange relief and the wash-sale extension, signal where Congress is heading.
Practical Implications for US Crypto Holders Right Now
Stablecoin Payments: File Under Current Rules
Until stablecoin medium-of-exchange relief becomes law, every USDT or USDC transaction is still a taxable event. That means tracking your cost basis on every stablecoin you spend. If you've been using stablecoins for payments and not recording gains and losses, now is the time to reconstruct those records. Your 2026 return will be filed under current rules regardless of what this bill ultimately does.
Wash-Sale Harvesting: Reassess Your Strategy
If you've planned a year-end tax-loss harvesting strategy that relies on immediately repurchasing crypto after selling it at a loss, be aware that the legislative direction is toward closing this gap. Even if the wash-sale extension doesn't take effect for 2026, building a plan that will still work when it does is better than having to unwind positions in a hurry.
Voluntary Disclosure: Start Gathering Records
If you have years of incomplete crypto records, the prospect of a dedicated IRS voluntary disclosure program with reduced penalties is worth paying attention to. The program doesn't exist yet, but the signal from Congress is that one is coming. Using this period to reconstruct your transaction history, identify gaps, and estimate your exposure puts you in a much better position to act quickly if and when a program opens.
Staking Rewards: Current IRS Guidance Still Applies
With the staking deferral provision removed, Revenue Ruling 2023-14 remains the operative IRS position. Report staking rewards as ordinary income at their fair market value when received. Do not assume the removal of the provision from this bill means the IRS will take a softer approach in the interim; the existing ruling has not changed.
Frequently Asked Questions
Does the Digital Asset Tax Certainty Act change my USDT or USDC tax obligations right now?
No. The bill has only cleared committee. Until it passes both chambers of Congress and is signed into law, current IRS rules apply. Every stablecoin transaction is still a potentially taxable disposal under existing guidance.
Will crypto wash-sale rules apply to my 2026 tax return?
Not based on current law. The wash-sale extension is proposed in the bill but has not been enacted. Your 2026 return will be governed by rules in effect at year-end. That said, if you're planning a loss-harvesting strategy, factor in the legislative direction when deciding whether to immediately repurchase after a sale.
What happened to the staking deferral proposal?
It was removed during the markup session after objections from the banking industry. Staking rewards remain taxable as ordinary income when received, per Revenue Ruling 2023-14, with no deferral available. Congress may revisit this in the next legislative term.
What is the voluntary disclosure program and when does it open?
The bill would direct Treasury to create one, but it doesn't exist yet. No opening date, penalty schedule, or eligibility criteria have been published because the program has not been established. Watch for IRS guidance if and when the bill is enacted.
When should I expect these rules to actually affect how I file crypto taxes?
Realistically, not before the 2027 tax year at the earliest, and possibly later. Congress recesses until November, and the bills are widely expected to be reintroduced in the next Congress rather than passed in the current term. File 2026 taxes under today's rules.
Source: Accounting Today