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.
The Senate bill proposes a de minimis exemption—essentially a rule that ignores small amounts that are too trivial to track—for small stablecoin purchases. Although the specific dollar limit hasn’t been reported yet, this exemption could have a significant impact, considering that Tether (CRYPTO:USDT) and USDC (CRYPTO:USDC) together have a market value approaching $260 billion.
The House Crypto Tax Bill Sets a $10 Limit and a 2028 Start Date
Meanwhile, the House version, known as H.R. 10357 or the Digital Asset Tax Certainty Act, from Ways and Means Chair Jason Smith, advanced out of his committee with a vote of 38 to 5 on September 16.
This bill includes a $10 de minimis exception that applies to network fees paid in cryptocurrency rather than purchases. It is set to take effect in 2028 and excludes individuals who conducted more than 5,000 transfers in the prior year.
Additionally, the House bill treats the redemption value of stablecoins as their cost basis when purchased at or near the $1 peg, while keeping mining and staking rewards taxed as ordinary income. This means that the two legislative chambers still need to agree on how extensive the small-purchase exemption should be.
Both Crypto Tax Bills Would Close the Wash-Sale Loophole for Bitcoin and XRP
Currently, tax code Section 1091 prevents investors from claiming a loss on stocks or securities they buy back within 30 days before or after a sale. However, since the IRS treats cryptocurrencies as property, Bitcoin or XRP holders can sell their assets at a loss, offset that loss against other gains, and then repurchase the same coins within minutes.
Many holders are facing this situation, especially with Bitcoin trading around $84,000—about 33% below its all-time high of $126,080—and XRP trading at $1.49, well below the $2.75 mark where many bought in. For example, if a holder bought 1,000 XRP for $3,000, they could sell at around $1,490, realize a loss of $1,510, and immediately buy back the same coins the same day.
Both the Senate and House bills would apply the wash-sale rule to digital assets. This means a holder who wants to capitalize on losses would have to wait 30 days to repurchase their coins, potentially missing any price rallies in the meantime.
What Does the Crypto Tax Bill Mean for Bitcoin and XRP Holders?
The proposed changes to the wash-sale rule could have a bigger impact on Bitcoin and XRP holders than the tax exemption for small purchases. Ending the ability to sell and immediately rebuy to realize a loss could affect many holders during December’s year-end loss selling. However, until Congress passes either the Senate or House bill, current laws remain in effect.
The potential downside for holders with the most significant losses is clear: if Congress moves quickly and enacts the proposed changes, those individuals may lose the opportunity to claim deductions under the existing rules.
If the Senate Finance Committee, where Daines previously called for a clearer crypto tax framework on July 16, schedules discussions on the bill while keeping the wash-sale language in place, December 2026 could mark the last opportunity to take advantage of the current loophole. If Congress falls short—particularly after the Clarity Act’s failure—the loophole may remain open into 2027.
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Sam Daodu is a crypto analyst who's spent nearly a decade making blockchain understandable—no easy task when most whitepapers read like fever dreams. He writes for 24/7 Wall St., covering Bitcoin, altcoins, and crypto market analysis for investors. Before crypto, he was a tech writer (back when explaining "the cloud" was peak innovation). Since 2018, he's written for CoinTelegraph, Yahoo Finance, The Block, Cryptonews, Zypto, Rain, and more—basically anywhere people want crypto news without the headache. Sam runs MacLabs Marketing, a content agency for crypto brands tired of sounding like AI wrote their website. He also publishes free crypto education on his site for Web3 enthusiasts who think "gas fees" is a typo. When he's not writing or staring at charts, Sam's either: - Watching anime (currently convinced One Piece has better tokenomics than most altcoins) - At the gym sculpting himself into a Greek god - Listening to the music your mum warned you only bad boys listen to Connect: LinkedIn | Email | MacLabs Marketing
