Discussions in the U.S. Congress over the uses and tax treatment of stablecoins continue to intensify. Representative Brad Sherman stated at a hearing of the House Financial Services Committee that if the government uses stablecoins to issue tax refunds or emergency payments, it could pose compliance risks greater than the efficiency gains.
The hearing focused on government payment scenarios.
The controversy began with statements from Kyle Hauptman, Chairman of the National Credit Union Administration, who said during a hearing that dollar-pegged stablecoins can operate 24/7, theoretically enabling tax refunds and emergency assistance to be disbursed on weekends or holidays without being restricted by traditional banking hours.
Sherman firmly opposed this, stating that government-backed stablecoin payments would effectively endorse a parallel payment system that could be used to evade tax regulations. He also noted that yield-bearing stablecoins are equally concerning, as market participants are already seeking ways to circumvent interest rate restrictions.
Congress is simultaneously reviewing the cryptocurrency tax bill.
As this debate unfolds, the U.S. Congress is also advancing discussions on digital asset tax rules. The House Committee on Ways and Means recently released seven discussion drafts and plans to hold a related hearing on June 9.
- Small-scale tax treatment of stablecoins
- Staking Rewards and Mining Income Recognition
- DeFi Lending and Wash Trading Rules
One proposal suggests providing minimal exemption for minor gains and losses arising from the use of compliant stablecoins in everyday small-value payments. This approach aims to distinguish payment-oriented stablecoins from speculative crypto trading, thereby reducing the tax burden on routine payments.
Similar provisions previously appeared in the bipartisan PARITY Act. According to earlier statements from the lawmakers’ offices, the bill sought to make regulated payment stablecoins more tax-equivalent to cash, while incorporating safeguards to prevent transaction arbitrage and rule abuse.
Regulators discuss banks and compliance arrangements
In addition to tax issues, federal regulators also discussed the implementation of stablecoin regulation during the same hearing. Travis Hill, Chairman of the Federal Deposit Insurance Corporation, stated that regulators are preparing customer identification requirements for stablecoin issuers, and a draft of the rules may be released soon.
U.S. Comptroller of the Currency Jonathan Gould responded at the meeting to a nationwide trust bank charter application related to World Liberty Financial. He defended the agency’s handling of the matter and denied any influence from the Trump family.
The hearing takes place as crypto companies continue to seek access to the traditional banking system. Falcon Finance has launched the fUSD stablecoin in partnership with federally chartered crypto bank Anchorage Digital; Kraken has recently obtained conditional access to a Federal Reserve master account.