While Congress advanced several pieces of legislation relating to the regulation and treatment of digital assets during its so-called crypto week, the tax consequences are not immediately clear but will need to be resolved on the Hill and through IRS guidance, according to EY Financial Services Crypto Tax Leader Tom Shea.
Stablecoins
Last week’s crypto-themed legislative push in Congress involved three separate pieces of legislation.
The House advanced two bills: 1) the Digital Asset Market Clarity Act of 2025 (H.R. 3633) and 2) the Anti-CBDC Surveillance State Act (H.R. 1919). The former would establish foundational rules for the sale of digital commodities, overseen by the Securities and Exchange Commission and the Commodity Futures Trading Commission. The latter would prohibit the creation of a central digital asset bank.
Out of the Senate was the Guiding and Establishing National Innovation for U.S. Stablecoins – or GENIUS – Act (S. 1582). After some drama with a procedural vote and intervention from President Trump, the GENIUS Act passed in both chambers and was signed into law July 18 (P.L. 119-27).
The purpose of the bill is to bring stablecoins – a form of digital asset closely tied to the value of a fiat currency and that is generally less volatile than other cryptocurrencies – into the mainstream regulatory fold with a first-of-its-kind framework.
Shea told Checkpoint that “there was really no tax mention” in the GENIUS Act, “although it does raise an interesting concept of this payment stablecoin and whether tax could follow in kind of a similar designation.”
This is because stablecoins are currently classified “as under the digital asset umbrella,” Shea explained. The IRS was “very clear about that, and the default classification for digital assets are property. “Following that logic, the exchange of a stablecoin for fiat is “still technically a taxable transaction,” he continued.
Therefore, the GENIUS Act’s stablecoin classification is “going to give off a very minimal tax impact,” Shea concluded. Then, the question for the IRS becomes “is there a way to apply the GENIUS Act and potentially carve stablecoins out” when they “are used for payments.” The rationale would be to avoid “what some might view as unnecessary reporting on the broker side and then on the individual side,” according to Shea.
Lingering Issues
Shea acknowledged that there is a bipartisan appetite to pin down specific tax treatment on digital asset transactions, as evidenced by the House Ways and Means Oversight Subcommittee hearing on digital asset tax policy and what congressional taxwriters should prioritize next.
He said there is potential for a de minimis threshold on reportable transactions, perhaps a $300 threshold that has been proposed. Congress heard ample testimony from the hearing’s witnesses on the need for clear rules on staked rewards. Those who validate activity on a blockchain are rewarded for their contributions, often in the form of the chain’s native token.
But the IRS has said that stakers recognize income upon receipt of the reward, not when it is sold. Shea said there is a legislative push to allow for the deferral of staked rewards, but that would “contradict” IRS rules, “and we had very little existing guidance to begin with.”
The existing treatment of staked rewards is something “a lot of folks in the industry didn’t see surviving this long,” but the prospect of that changing “seems to be real now.”
Where there is less bipartisan agreement, however, is the application of the wash sale rule to digital assets. This refers to “the deferral of losses when you repurchase the security that you sold at a loss within the specified window,” said Shea, “which is 30 days before, 30 days after.”
Under current law, the wash sale rule does not apply to digital assets, and Congress is likely to be split on whether it should. It was already “challenging” to apply the wash sale rule to “traditional securities,” Shea added, so the implementation of an “industry-unfavorable” wash sale rule for digital assets may be a dealbreaker for key votes.
Inherently, this is a “timing issue” that would “largely fall on brokers,” he said. The “tough part” is being able to “look forward and look back and capture these lost deferrals,” Shea explained. “And that ends up impacting the basis when you’re ultimately allowed to take the loss,” which brokers will “have to factor” in “their 1099 reporting.”
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