GENIUS Act Crypto Tax Guide 2025–2026

Overview: The New US Cryptocurrency Legal Landscape — Enacted Laws, Pending Bills, and IRS Rules Americans Must Know

The United States cryptocurrency regulatory landscape has undergone its most dramatic transformation in history. The signing of the GENIUS Act into law on July 18, 2025 — the first comprehensive federal crypto statute ever enacted — marks a before-and-after moment for American digital asset law. Alongside it, sweeping IRS broker reporting rules introducing Form 1099-DA, a presidential executive order establishing a Bitcoin Strategic Reserve, the rescission of SEC Staff Accounting Bulletin 121, and a wave of enforcement-deregulation actions have reshaped the obligations — and opportunities — facing American crypto investors, traders, businesses, and institutions.

At stake are fundamental questions about which digital assets are commodities and which are securities, who qualifies as a regulated “broker” for tax reporting purposes, how stablecoin issuers will be supervised, and what the Trump administration’s embrace of crypto means for federal enforcement posture. For Americans with cross-border holdings — including US persons who live abroad or hold crypto through foreign platforms — the interaction between these new rules and existing international tax frameworks creates additional layers of complexity.

This article surveys the major US crypto legislative and regulatory developments from 2024 through September 2026, analyzes their tax and compliance implications, and explains how an experienced US tax attorney can help individuals and businesses navigate this rapidly evolving terrain.

Background: From Enforcement-by-Litigation to Enacted Federal Law

For years, US cryptocurrency regulation was characterized by jurisdictional fragmentation and enforcement-by-litigation. The SEC and CFTC each claimed authority over digital assets, resulting in overlapping and often contradictory positions. The collapse of FTX in November 2022 accelerated Congressional pressure for a coherent statutory framework. Meanwhile, the IRS had been issuing guidance on crypto taxation — most notably Revenue Ruling 2023-14 on staking rewards — while laying the groundwork for a mandatory broker reporting regime.

The 2024–2025 legislative and regulatory cycle produced more consequential crypto-specific law than the preceding decade combined. The election of a crypto-friendly administration in late 2024 brought an immediate and sweeping deregulatory pivot: the SEC dropped enforcement actions against Coinbase, Kraken, Consensys, Robinhood, OpenSea, and Cumberland; settled with Ripple; rescinded SAB 121; and declared memecoins outside its regulatory jurisdiction. The Justice Department disbanded its National Cryptocurrency Enforcement Team. Paul Atkins, described as having close ties to the crypto industry, replaced Gary Gensler as SEC Chair.

Congress, for its part, moved to codify the jurisdictional clarity and consumer protection frameworks that the agencies had struggled to develop on their own — culminating in the GENIUS Act’s enactment. For US taxpayers, these developments carry direct implications for how crypto gains are reported, what records must be kept, how stablecoins are treated, and what penalties apply for non-compliance.

Key Issues and Findings: Major US Crypto Laws and Regulations of 2024–2026

The GENIUS Act: America’s First Federal Stablecoin Law — Signed July 18, 2025

The Guiding and Establishing National Innovation for US Stablecoins Act — the GENIUS Act — is now federal law, signed by President Trump on July 18, 2025 (Pub. L. 119–27). It is the first comprehensive federal framework for payment stablecoins ever enacted in the United States. The Senate passed the bill on June 17, 2025 by a bipartisan vote of 68–30; the House followed on July 17, 2025 with a vote of 308–122. Key provisions include:

Reserve requirements: Stablecoin issuers must maintain 1:1 reserves in US dollars, short-term Treasury securities, or Federal Reserve deposits. Algorithmic stablecoins backed solely by other digital assets are prohibited.
Tiered licensing: Issuers with outstanding stablecoins exceeding $10 billion must obtain a federal license through the OCC or the Federal Reserve. Smaller issuers may operate under qualifying state frameworks, subject to federal standards.
Customer protections: Redemption rights must be guaranteed at par on demand. Issuers are prohibited from pledging reserves.
AML and KYC: Issuers are subject to Bank Secrecy Act obligations and must implement robust customer identification programs.

The jurisdictional carve-out — a critical legal development. Analyses from the Oxford Business Law Blog and the Brookings Institution have identified a significant and underappreciated structural feature of the GENIUS Act: compliant payment stablecoins are explicitly excluded from the federal definitions of both “security” and “commodity,” placing them in a distinct regulatory category entirely outside SEC and CFTC jurisdiction (except for fraud). This is not merely a jurisdictional technicality — it creates a third category of digital asset that is regulated as a payment instrument rather than a financial product, with profound implications for how stablecoins interact with existing federal securities and commodities law. Notably, GENIUS-regulated stablecoins are also not classified as bank deposits, meaning they lack FDIC insurance and direct Federal Reserve access.

GENIUS Act: Does not itself alter the tax treatment of stablecoins.

Tax treatment of stablecoins remains governed by general principles of property taxation under the Internal Revenue Code and IRS Notice 2014-21. A stablecoin received as compensation is ordinary income; a stablecoin sold or exchanged at a gain produces a taxable capital gain. The IRS has not yet issued updated guidance addressing the GENIUS Act’s jurisdictional carve-out or whether it has any tax characterization implications. This gap represents active legal uncertainty that a knowledgeable US tax attorney should monitor closely.

USDC vs. USDT: Diverging compliance postures.

Not all stablecoins stand in the same position relative to the GENIUS Act, and this distinction matters for US taxpayers and advisors assessing counterparty risk. Circle’s USDC has positioned itself as the frontrunner for GENIUS Act compliance: it publishes weekly reserve attestations by a Big Four accounting firm, holds reserves predominantly in short-term Treasury securities and cash at regulated US financial institutions, and has deep integration with US banking infrastructure through Coinbase, Visa, and major fintech platforms. Tether’s USDT — the world’s largest stablecoin by market cap — relocated its headquarters to El Salvador in early 2025 and, as of mid-2025, had not completed the federal authorization process required under the GENIUS Act, though it was working toward compliance. Tether’s historical reserve controversies (the 2021 New York Attorney General settlement revealed reserves had at times included affiliated company receivables rather than cash and Treasuries) add further compliance risk. Neither divergence alters the US tax treatment of either stablecoin — both USDC and USDT remain property under IRS Notice 2014-21, and swapping one for the other is a taxable disposition — but a knowledgeable US tax attorney advising stablecoin-heavy clients should flag the regulatory and counterparty risk differential.

Tokenized deposits: What the GENIUS Act does not cover — and why it matters.

A point of confusion frequently arising in client conversations is the distinction between GENIUS Act payment stablecoins and bank-issued tokenized deposits. A tokenized deposit is a blockchain representation of a traditional bank deposit — the deposit remains on the issuing bank’s balance sheet as a liability; the token is simply a new transfer mechanism for that same deposit. Critically, tokenized deposits are not payment stablecoins and are not governed by the GENIUS Act — they fall under existing banking law and the supervision of the bank’s primary federal regulator. Unlike GENIUS Act stablecoins, tokenized deposits issued by FDIC-insured banks may qualify for FDIC deposit insurance up to applicable limits, and — importantly — they can pay interest or yield to holders. Section 4(a)(11) of the GENIUS Act explicitly prohibits payment stablecoin issuers from paying any interest or yield to token holders, a restriction that does not apply to tokenized deposits. For US tax purposes, interest or yield received on a tokenized deposit is ordinary income, taxable in the year received — the same treatment as conventional bank interest. An experienced US tax attorney should be consulted to ensure correct characterization of income from any digital dollar instrument before filing.

Criticisms and limitations: The GENIUS Act has attracted substantive criticism that practitioners should understand.

Consumer Reports argued the law provides insufficient consumer protection and permits big tech companies to engage in bank-like activities without equivalent regulatory burden. New York Attorney General Letitia James and other prosecutors contended that the Act lacks provisions requiring stablecoin issuers to return stolen funds to fraud victims — potentially allowing issuers to profit from fraud proceeds. Economists Max Harris and Kenneth Rogoff have drawn parallels between the law’s regulatory approach and the chaotic “free banking era” of 1837–1862. These criticisms may drive future legislative amendment and are relevant to assessing the long-term compliance risk profile of stablecoin-based business models.

The STABLE Act: Superseded but Influential

The Stablecoin Transparency and Accountability for a Better Ledger Economy Act (STABLE Act) was the House companion to the GENIUS Act, passed by the House Financial Services Committee in early 2025 and incorporating a two-year moratorium on algorithmic stablecoins. Rather than reconciling the two competing bills, the House passed the Senate’s GENIUS Act directly on July 17, 2025, rendering the STABLE Act moot. Its core consumer protection provisions were substantially absorbed into the final GENIUS Act text during Senate negotiations.

The CLARITY Act: The 119th Congress Market Structure Bill — Senate Pending as of September 2026

The Financial Innovation and Technology for the 21st Century Act (FIT21) passed the House in May 2024 (279–136) but died in the Senate at the end of the 118th Congress. Its successor — the Digital Asset Market Clarity Act (H.R. 3633), known as the CLARITY Act — passed the House during Crypto Week in July 2025 and is now the central piece of pending US crypto market structure legislation. A cloture vote is scheduled for September 15, 2026 at 2:15 p.m. ET, but prediction markets give the bill only approximately 17% odds of becoming law in 2026. It is not yet law. Its commodity/security jurisdictional framework — drawn directly from FIT21 — is highly relevant to understanding the direction of US crypto regulation even while pending: Their core framework, drawn directly from FIT21, remains highly relevant:

Digital commodities vs. digital securities: The framework draws the jurisdictional line by reference to blockchain decentralization. A digital asset on a “functional” and “decentralized” blockchain — where no issuer or affiliated person controls 20% or more of the asset or voting power — is a “digital commodity” subject to CFTC jurisdiction. Assets on centralized or immature blockchains are “digital securities” under SEC jurisdiction.
Maturity pathway: Issuers of digital securities may transition to commodity status once the underlying blockchain achieves the decentralization threshold.
Registered digital commodity exchanges: Spot trading of digital commodities would occur on CFTC-registered exchanges, closing the longstanding gap that allowed unregulated spot crypto trading.
Disclosure obligations: Digital asset issuers must make ongoing public disclosures regardless of classification.

The tax implications of a formal commodity/security distinction are significant. Digital assets classified as commodities may potentially qualify for Section 1256 treatment — mark-to-market rules with a 60/40 long-term/short-term capital gains split — though the IRS has not confirmed this position. Classification also bears directly on the wash-sale rule question: the wash-sale provisions of IRC § 1091 currently do not apply to cryptocurrency (it is property, not “stock or securities”), allowing crypto investors to harvest losses and immediately repurchase. If Congress extends the wash-sale rules to digital securities — a recurring proposal — this planning strategy would be eliminated for those assets. A seasoned US tax attorney should be engaged before structuring any loss-harvesting strategy that relies on crypto’s current wash-sale exemption.

IRS Form 1099-DA: The New Broker Reporting Regime

Perhaps the most immediately consequential development for individual US crypto investors is the IRS’s finalization of broker reporting regulations under IRC § 6045, effective for the 2025 tax year. The new rules introduce Form 1099-DA — the Digital Asset Proceeds from Broker Transactions form — and require:

Centralized exchange reporting: Platforms meeting the definition of a “broker” — including centralized cryptocurrency exchanges — must report gross proceeds from digital asset sales to both the IRS and taxpayers. The effective date for gross proceeds reporting is January 1, 2025.
Cost basis reporting: Beginning in 2026, brokers must also report adjusted cost basis and holding period for digital asset dispositions.
Default cost basis method: The IRS has designated FIFO (first in, first out) as the default cost basis method for digital assets unless a taxpayer specifically identifies the units disposed of. For investors who accumulated crypto at varying prices over years, the FIFO default can dramatically increase taxable gains — a critical planning point.
DeFi broker rules deferred: Proposed regulations that would have extended broker reporting to decentralized finance protocols and unhosted wallet providers faced legal challenges and were substantially delayed. The IRS and Treasury have indicated revised DeFi broker rules remain under development.

“As a Certified Specialist in Taxation, I advise every US-connected crypto investor — whether they are American citizens living abroad or non-residents with US exchange accounts — to immediately review their cost basis records and consider whether specific identification elections are available to them before the 2026 cost basis reporting rules take effect,” said David Rotfleisch of Rotfleisch & Samulovitch P.C. “The FIFO default can cause significant over-taxation for long-term holders who accumulated at low prices, and this is a planning window that closes quickly.”

The $TRUMP and $MELANIA Meme Coins: A Live US Tax Issue

One of the most actively searched crypto tax questions of 2025 involves the $TRUMP and $MELANIA meme coins launched by President Trump and his family in January 2025. The $TRUMP coin surged to a market capitalization exceeding $5 billion within hours of launch, generated nearly $100 million in trading fees in its first two weeks, and — after Trump offered a private dinner to top coin holders in April 2025 — rallied 70% with the total in circulation reaching $2.4 billion. By April 2025, affiliated entities had collected approximately $349 million in fees.

The US tax treatment of meme coin transactions follows general cryptocurrency principles and is not altered by the SEC’s February 2025 declaration that memecoins are outside its regulatory jurisdiction. For US taxpayers:

Purchase and sale: Every disposition of a meme coin — sale, exchange for another crypto, or use in a transaction — is a taxable event. Gains are capital gains; losses are capital losses.
Receipt as prize or income: If a taxpayer received $TRUMP or $MELANIA coins as a prize (e.g., through a promotional distribution), the fair market value at receipt is ordinary income, taxable in the year received.
Airdrops and promotional distributions: Per Revenue Ruling 2023-14 and IRS FAQ guidance, tokens received in airdrops or promotional distributions are ordinary income when received and in the taxpayer’s dominion and control.
Conflict-of-interest dimension: The House Judiciary Committee Democrats released a report in November 2025 finding that Trump family crypto ventures — including World Liberty Financial and its USD1 stablecoin — raised significant corruption concerns. These policy and political developments do not alter individual tax obligations but may affect the regulatory trajectory of meme coins.

“The $TRUMP meme coin situation illustrates a principle I emphasize to every client who asks about novel crypto instruments,” said David Rotfleisch of Rotfleisch & Samulovitch P.C. “The legal or regulatory status of a coin has no bearing on its tax treatment. The IRS taxes crypto as property. Whether something is a security, a commodity, a memecoin, or expressly outside SEC jurisdiction, if you sold it at a gain, you owe tax on that gain. An experienced US tax attorney can help you structure your records and reporting correctly from the outset, rather than trying to reconstruct them at audit.”

The Bitcoin Strategic Reserve and Federal Crypto Policy

In January 2025, President Trump signed an executive order establishing a working group on digital assets. On March 6, 2025, a second executive order formally established the Strategic Bitcoin Reserve and a separate US Digital Asset Stockpile, directing federal agencies to hold — and not liquidate — Bitcoin and other digital assets currently in government custody, primarily from criminal forfeiture proceedings. The reserve was structured around existing holdings; the order did not authorize using taxpayer funds to purchase additional Bitcoin, a limitation that disappointed some industry participants.

The reserve cemented Bitcoin’s status as a recognized US financial instrument held alongside gold and oil — a development with significant implications for institutional adoption, price stability narratives, and the political durability of the current pro-crypto regulatory environment. It does not create any new tax obligations or exemptions for private holders.

More practically significant was the rescission of SEC Staff Accounting Bulletin 121 (SAB 121) on January 23, 2025 (replaced by SAB 122). SAB 121 had required banks and financial institutions to record customer crypto holdings as liabilities on their own balance sheets — a rule so onerous it effectively prohibited most regulated banks from offering crypto custody. Its rescission opened the door to mainstream bank crypto custody, with major implications for institutional investors seeking regulated, insured custodial solutions.

Anti-CBDC Legislation and the Digital Asset AML Act

The CBDC Anti-Surveillance State Act, which prohibits the Federal Reserve from issuing a retail central bank digital currency directly to individuals, has passed the House and is pending in the Senate. It reflects bipartisan privacy concerns about government visibility into financial transactions and would not, if enacted, affect the tax treatment of private cryptocurrencies.

The Digital Asset Anti-Money Laundering Act — introduced by Senators Warren and Marshall — would extend Bank Secrecy Act obligations, including suspicious activity reporting and customer due diligence requirements, to DeFi protocols, miners, validators, and unhosted wallet providers. It has not advanced to a Senate floor vote but signals sustained Congressional interest in extending the AML perimeter across the entire digital asset ecosystem.

Implications: What the 2025–2026 US Crypto Laws Mean for Taxpayers and Investors

The cumulative effect of 2024–2025 legislative, regulatory, and enforcement developments creates a materially more demanding compliance environment — and, for some participants, significant new planning opportunities.
Reporting exposure is expanding rapidly. Form 1099-DA will generate IRS matching data for centralized exchange transactions beginning with the 2025 tax year. Investors who have historically under-reported or failed to track crypto gains now face a substantially elevated IRS audit risk, as the IRS will be able to cross-reference exchange-reported proceeds against filed returns.
The GENIUS Act’s jurisdictional carve-out creates unresolved tax ambiguity. By placing compliant stablecoins outside both the “security” and “commodity” definitions, the GENIUS Act raises questions the IRS has not yet answered: does this statutory carve-out affect how stablecoin transactions are characterized for tax purposes? Does it have any bearing on whether stablecoin-denominated transactions trigger IRC provisions that reference “securities” or “commodities”? Until the IRS issues updated guidance, the answer is almost certainly no — IRS Notice 2014-21 treats all cryptocurrency as property — but the question is live and a top US tax attorney should monitor IRS guidance as it develops.
Cost basis planning is urgent. The FIFO default under the new broker reporting rules disadvantages investors who accumulated Bitcoin or other assets at historically low prices. Before the 2026 cost basis reporting date, investors should work with a knowledgeable US tax attorney to assess whether specific identification elections can be established and documented on a per-account, contemporaneous basis.
The wash-sale window may be closing. Crypto’s current exemption from the wash-sale rules of IRC § 1091 allows investors to harvest losses and immediately repurchase the same asset. The market structure bills advancing through the Senate may extend wash-sale rules to digital securities if enacted. Investors relying on this strategy should act while the exemption remains intact and have a plan ready if it is eliminated.
Meme coin and DeFi participants face ordinary income exposure. Receipt of $TRUMP, $MELANIA, or any other meme coin through promotions, airdrops, or reward programs creates ordinary income in the year of receipt. DeFi participants earning staking rewards, liquidity pool fees, or yield — even in the absence of a Form 1099 — have the same obligation. These amounts must be self-reported, and an experienced US tax attorney should ensure accurate characterization.
Foreign platform users face heightened FBAR and FATCA scrutiny. US persons who hold crypto on non-US exchanges may have Foreign Bank Account Report (FBAR) and Form 8938 (FATCA) filing obligations if aggregate foreign financial account balances exceed applicable thresholds. Penalties for willful failure to file are severe. The interaction between these obligations and the GENIUS Act’s new licensing framework for foreign stablecoin issuers adds further complexity.
Institutional investors benefit from the bank custody opening. The rescission of SAB 121 allows regulated banks to offer crypto custody to institutional clients for the first time, providing access to insured, regulated custodial solutions previously unavailable.
The deregulatory environment is policy-dependent, not permanent. The current administration’s crypto-friendly posture — dropping enforcement actions, disbanding the crypto enforcement team, rescinding SAB 121 — rests on executive branch discretion, not statutory protection. A future administration could reverse many of these positions without Congressional action. Compliance infrastructure built now is an investment against that risk.

Takeaways: Practical Guidance for US Crypto Investors and Businesses

The GENIUS Act is now enacted federal law (Pub. L. 119–27, signed July 18, 2025), creating the first federal licensing framework for stablecoin issuers — with compliance obligations already in effect.
The GENIUS Act’s jurisdictional carve-out places compliant stablecoins outside SEC and CFTC reach entirely, creating a third regulatory category with unresolved tax characterization implications the IRS has yet to address.
Form 1099-DA requires centralized exchanges to report gross proceeds to the IRS for the 2025 tax year; cost basis (FIFO default) reporting follows in 2026 — making immediate cost basis planning essential.
The wash-sale rule currently does not apply to crypto, providing loss-harvesting opportunities — but the bipartisan PARITY Act (H.R. 8899, introduced May 2026) proposes extending IRC § 1091 to all digital assets. Investors should harvest outstanding losses now while the exemption remains in place.
The PARITY Act also proposes non-recognition of gain or loss on GENIUS Act-compliant stablecoin sales, a mark-to-market election for active traders, staking income deferral, and a $200 de minimis exemption for stablecoin payments — none of which are current law but all of which carry immediate planning implications.
Every meme coin transaction — purchase, sale, receipt as prize or airdrop — is a taxable event; the SEC’s declaration that memecoins are outside its jurisdiction has no bearing on IRS tax treatment.
The Bitcoin Strategic Reserve and SAB 121 rescission signal a durable institutional shift, though neither directly alters individual tax obligations.
US persons holding crypto on foreign exchanges must assess FBAR and FATCA reporting obligations annually — these requirements exist independent of whether the foreign platform itself reports to the IRS.
The current deregulatory posture rests on executive discretion; investors should build compliance infrastructure that would withstand a future change in administration.
Prior-year under-reporters should explore the IRS Voluntary Disclosure Practice now, before Form 1099-DA matching triggers an audit — a top US tax attorney can guide you through the process.

Pro Tax Tips: Working with a US Tax Attorney on Crypto Compliance in 2025–2026

The complexity and pace of US crypto regulatory change make professional guidance indispensable. A knowledgeable US tax attorney can provide strategic value across several dimensions that go well beyond tax return preparation.

Review your cost basis methodology now, before the 2026 deadline. The IRS FIFO default is not mandatory — specific identification of disposed units is permitted where the taxpayer maintains adequate records and makes a contemporaneous election. For investors with large unrealized gains in early-acquired positions, the difference between FIFO and specific identification can represent tens or hundreds of thousands of dollars in additional tax. An experienced US tax attorney can help you establish and document a defensible specific identification methodology on a per-exchange, per-wallet basis before the 2026 cost basis reporting rules lock in your approach.
Assess whether your crypto activities constitute a trade or business. Investors are taxed on capital gains; traders who satisfy the “trader in securities” tests — or the equivalent analysis for digital commodities under the emerging market structure framework — may elect mark-to-market treatment under IRC § 475, allowing ordinary loss deductions on losing positions. A top US tax attorney can analyze your trading frequency, holding periods, and intent to determine whether trader status is available and beneficial in your specific situation.
Harvest crypto losses strategically — the PARITY Act may close the window permanently. Unlike stocks, cryptocurrency is currently exempt from the wash-sale rules of IRC § 1091, meaning you can sell at a loss and immediately repurchase the same asset without forfeiting the loss deduction. The bipartisan PARITY Act (H.R. 8899, introduced May 2026) proposes extending these rules to all actively traded digital assets. Unlike earlier proposals, the PARITY Act has bipartisan sponsorship and is linked directly to the already-enacted GENIUS Act, giving it stronger legislative momentum than most prior crypto tax bills. If enacted, wash-sale rules would apply to both Bitcoin and digital securities — eliminating this strategy entirely. A seasoned US tax attorney can audit your portfolio for loss-harvesting opportunities and execute them while the exemption remains intact.
Evaluate the tax treatment of staking, DeFi income, and meme coin receipts. Revenue Ruling 2023-14 confirmed that staking rewards are ordinary income when received. Lending income, liquidity pool fees, yield from DeFi protocols, and meme coin receipts through promotional distributions are similarly taxable as ordinary income in the year received — even without a Form 1099. Note that Revenue Ruling 2023-14 is currently being challenged in Jarrett v. United States, where a bench trial is scheduled for September 29, 2026; taxpayers with material staking income in open tax years should discuss the implications with an experienced US tax attorney. Until a court rules otherwise, staking rewards are ordinary income under current IRS guidance.
Plan for the GENIUS Act’s stablecoin compliance obligations. If you operate a stablecoin-based business or hold significant stablecoin positions, engage a US tax attorney now to model the compliance cost of the GENIUS Act’s reserve and licensing requirements. The jurisdictional carve-out that places compliant stablecoins outside SEC and CFTC oversight also means that standard securities law compliance frameworks do not apply — a top US tax attorney and regulatory counsel should map the applicable federal and state obligations for your specific business model.
Address any prior-year under-reporting through a voluntary disclosure. The IRS Voluntary Disclosure Practice and the streamlined filing compliance procedures remain available to US taxpayers who have failed to report crypto income — including US persons abroad with foreign exchange accounts. With Form 1099-DA now generating IRS matching data from the 2025 tax year, the window for proactive voluntary disclosure is narrowing. An experienced US tax attorney can guide you through the voluntary disclosure process to achieve penalty mitigation and avoid criminal exposure before an audit commences.

Key Developments: August 2025 Through September 2026

This section covers verified legislative and regulatory developments from August 2025 through September 7, 2026, based on primary sources including the Federal Register, US Treasury, the OCC, and congressional records.

The CLARITY Act

Senate within reach but not yet enacted. The Digital Asset Market Clarity Act (H.R. 3633), which passed the House in July 2025 by 294–134, has advanced further than any prior crypto market structure legislation. The Senate Banking Committee passed it 15–9 on May 14, 2026, in a bipartisan vote (all 13 Republicans joined by two Democrats). The bill was formally placed on the Senate Legislative Calendar as Calendar No. 423 on June 1, 2026, making it eligible for a full Senate floor vote. Senate Majority Leader Thune filed a cloture motion on August 8, 2026, locking in a procedural floor vote for September 15, 2026 at 2:15 p.m. ET — one day after the Senate returns from recess.

The vote is a cloture motion on the motion to proceed, requiring 60 votes to overcome a filibuster. Outstanding issues blocking the necessary Democratic support include ethics provisions addressing senior government officials’ crypto ties, anti-money laundering provisions, limitations on decentralized finance, and restrictions on stablecoin yields. Prediction market traders have cut the bill’s odds of becoming law in 2026 to approximately 17%, and Galaxy Research lowered its probability estimate from 50% to 30% in July, citing the shrinking legislative calendar. Senator Lummis has warned that failure in 2026 could mean restarting the process with a Congress of unknown composition. Until enacted, the CLARITY Act’s commodity/security framework has no legal effect, and all existing tax characterization principles continue to apply.

GENIUS Act

GENIUS Act implementation is underway — full effect January 18, 2027. The GENIUS Act does not fully take effect until January 18, 2027 (18 months after enactment), or 120 days after implementing regulations are issued, whichever comes first. Treasury issued a Notice of Proposed Rulemaking on August 18, 2026, defining what counts as issuing, offering, or selling payment stablecoins in the United States, building on an Advance Notice of Proposed Rulemaking Treasury issued in September 2025. The OCC has separately issued a proposed rulemaking to implement the GENIUS Act’s licensing and regulatory requirements for entities under its jurisdiction.

Critically, Treasury’s September 2025 ANPRM explicitly solicited public comment on stablecoin tax characterization, asking whether IRS guidance on the classification of payment stablecoins would be necessary or helpful to taxpayers — including whether stablecoins might be treated as debt instruments for federal income tax purposes. As of September 2026, the IRS has issued no such guidance. Stablecoins remain property under IRS Notice 2014-21, and every swap or exchange is a taxable event. Digital asset service providers have until approximately July 2028 to restrict their activities to GENIUS Act-compliant stablecoin issuers.

DeFi broker reporting rules are repealed

DeFi broker reporting rules have been repealed — not delayed. This is the most significant update to the article’s original content. Congress passed a joint resolution and President Trump signed it into law in 2025 repealing the DeFi broker regulations, limiting Form 1099-DA information reporting to custodial brokers only. DeFi front-end providers, unhosted wallets, validators, and miners are no longer subject to any broker reporting obligation under current federal law. The original article described these rules as “deferred” — the accurate description as of July 2025 — but they have since been permanently eliminated by Congressional action. DeFi participants’ underlying tax liability is unaffected; only the third-party reporting obligation has been removed.

Form 1099-DA cost basis reporting

Form 1099-DA cost basis reporting is now live for 2026 transactions. Beginning with the 2026 tax year, Form 1099-DA reporting expands to include mandatory cost basis reporting — but only for “covered securities,” defined as digital assets acquired on or after January 1, 2026, and held continuously in the same broker account until sale. Assets acquired before 2026, or transferred from outside wallets or another broker, remain “noncovered securities” for which brokers are not required to report basis. Industry observers have noted this narrow definition means that in the first year of basis reporting, perhaps only 5% of a customer’s transactions might qualify as covered. The IRS has also confirmed that there is currently no mechanism for broker-to-broker cost basis transfer statements — a standard feature in traditional securities markets that does not yet exist in digital asset infrastructure. Investors who move assets between exchanges or to self-custody cannot rely on their broker to report accurate basis; they must maintain their own records. An experienced US tax attorney should be engaged to ensure your cost basis methodology is defensible across all platforms.

The PARITY Act: The Central US Crypto Tax Bill of 2026.

While the CLARITY Act addresses market structure and the GENIUS Act governs stablecoin issuance, the Digital Asset Protection, Accountability, Regulation, Innovation, Taxation, and Yields Act (PARITY Act, H.R. 8899) — introduced May 19, 2026 by Representatives Max Miller (R-OH) and Steven Horsford (D-NV) — is the most consequential pending US crypto tax legislation. Because it draws its stablecoin definitions directly from the already-enacted GENIUS Act, it can advance on a separate legislative track from the CLARITY Act. Its six core provisions carry direct planning implications for every US crypto investor and business:

Wash-sale rules extended to all digital assets. The PARITY Act rewrites IRC § 1091 to apply to actively traded digital assets and their derivatives. Under current law, crypto investors can sell at a loss and immediately repurchase the same asset without forfeiting the loss deduction — a strategy unavailable in equity markets. If enacted, that window closes permanently. Investors relying on crypto loss-harvesting strategies should act now while the exemption remains in place. A seasoned US tax attorney can help you quantify and execute outstanding harvesting opportunities before any effective date.
Stablecoin gain/loss non-recognition. Under proposed new IRC § 1046, no gain or loss would be recognized on the sale of a GENIUS Act-regulated payment stablecoin — provided the taxpayer’s basis is not less than 99% of the stablecoin’s redemption value. This would eliminate the current rule under which swapping USDC for USDT, or spending a stablecoin, is a taxable event. The exemption applies only to GENIUS Act-compliant issuers, which as of September 2026 includes USDC but not USDT. This is a significant departure from current law and represents a material tax benefit for stablecoin users — if enacted.
De minimis exemption for stablecoin payments. The PARITY Act proposes a $200 per-transaction de minimis exemption for payments made using regulated payment stablecoins, removing the compliance burden of reporting capital gains on small everyday transactions made with compliant stablecoins. No de minimis exemption applies to Bitcoin, Ether, or other non-stablecoin digital assets.
Mark-to-market election for active traders. Dealers and active traders in digital assets could elect mark-to-market accounting under IRC § 475, requiring annual recognition of gains and losses at fair market value. This aligns digital asset traders with dealers in other financial instruments and provides ordinary loss treatment — potentially more valuable than capital loss deductions in down years.
Staking and mining income deferral. The PARITY Act would allow miners and validators to defer income recognition on staking and mining rewards for up to five years, or until the point of sale — effectively moving the taxable event from receipt to realization. Under current IRS guidance (Revenue Ruling 2023-14), staking rewards are ordinary income when received regardless of whether they have been sold.
Constructive sale rules. The bill applies constructive sale doctrine to crypto derivative positions, targeting hedging strategies that currently allow indefinite tax deferral on appreciated positions.
FASB stablecoin accounting project advancing. In October 2025, FASB voted 6-1 to add a project to its technical agenda to determine when payment stablecoins may qualify as cash equivalents. At its April 2026 meeting, the Board unanimously agreed to expand Subtopic 350-60 to address crypto assets with enforceable rights, with draft guidance expected in mid-2026. For corporate and institutional holders, FASB’s eventual determination on stablecoin cash-equivalent classification may affect balance sheet treatment and financial statement presentation — a development a knowledgeable US tax attorney and accounting advisor should monitor jointly.

An experienced US tax attorney should be engaged immediately to model the impact of the PARITY Act’s wash-sale and mark-to-market provisions on your current portfolio strategy. The bill has not yet passed the House Ways and Means Committee as of September 2026, but its bipartisan sponsorship and connection to the GENIUS Act give it a stronger legislative foundation than most prior crypto tax proposals.

Frequently Asked Questions: US Crypto Tax and Regulatory Laws 2025–2026

Has the GENIUS Act been signed into law?

Yes. The GENIUS Act was signed by President Trump on July 18, 2025, and is now Public Law 119–27. It is the first comprehensive federal stablecoin statute in US history. The Senate passed it 68–30 on June 17, 2025; the House passed it 308–122 on July 17, 2025.

What is Form 1099-DA and when does it take effect?

Form 1099-DA is the new IRS information return for digital asset broker transactions. Centralized exchanges must report gross proceeds from crypto sales for transactions occurring on or after January 1, 2025. Cost basis reporting begins for transactions in 2026. Receiving a Form 1099-DA does not eliminate your obligation to self-report all crypto transactions — including those on platforms not yet required to report and all DeFi activity.

Does the GENIUS Act change how stablecoins are taxed?

No. The GENIUS Act is a banking and regulatory statute. It does not override IRS Notice 2014-21 or general tax principles, which continue to treat stablecoins as property. Every exchange of a stablecoin — including swapping USDC for USDT, or a stablecoin for another cryptocurrency — is a taxable event if the fair market value at the time of exchange differs from your cost basis. The IRS has not issued updated guidance addressing the GENIUS Act’s jurisdictional carve-out; consult an experienced US tax attorney for current advice.

What is the default cost basis method for crypto under the new IRS rules?

FIFO — first in, first out — is the default. This means the IRS will assume you disposed of your earliest-acquired units first, which can result in larger capital gains for investors who bought early at low prices. You may use specific identification instead, but you must maintain adequate records and make the election contemporaneously on a per-account basis. A knowledgeable US tax attorney can help you establish compliant records before the 2026 cost basis reporting rules take effect.

What is the status of the CLARITY Act (the crypto market structure bill)?

The Digital Asset Market Clarity Act (H.R. 3633) — the successor to FIT21 — passed the House during Crypto Week in July 2025 and has advanced further in the Senate than any prior crypto market structure bill. The Senate Banking Committee passed it 15–9 on May 14, 2026; it was placed on the Senate Legislative Calendar on June 1, 2026; and Senate Majority Leader Thune filed a cloture motion on August 8, 2026, setting up an initial floor vote for September 2026. The bill still requires a 60-vote Senate floor majority, reconciliation with the Senate Agriculture Committee’s Digital Commodity Intermediaries Act, reconciliation with the House-passed text, and presidential signature. Outstanding issues — including ethics provisions addressing government officials’ crypto ties, illicit finance provisions, and stablecoin yield restrictions — remain under negotiation. A top US tax attorney should be consulted before relying on any provision of the CLARITY Act for tax planning purposes, as it has not yet been enacted.

Are $TRUMP and $MELANIA meme coins taxable?

Yes. The SEC declared in February 2025 that memecoins are outside its regulatory jurisdiction, but that declaration has no effect on IRS tax treatment. Every sale or exchange of $TRUMP or $MELANIA is a taxable event — gains are capital gains, losses are capital losses. Meme coins received through promotional distributions or as prizes are ordinary income at the fair market value on receipt. Consult an experienced US tax attorney for reporting guidance specific to your situation.

What are my FBAR obligations for foreign crypto exchange accounts?

US persons with aggregate foreign financial account balances exceeding $10,000 at any point during the year must file an FBAR (FinCEN Form 114) annually. The IRS and FinCEN have indicated that foreign crypto exchange accounts meeting this threshold are reportable. Separately, Form 8938 (FATCA) reporting may apply at higher thresholds. Penalties for willful failure to file are severe — up to the greater of $100,000 or 50% of the account balance per violation. A seasoned US tax attorney with international tax experience should assess your specific circumstances.

What happened to the DeFi broker reporting rules?

The DeFi broker reporting rules have been repealed. The Biden administration finalized regulations in December 2024 that would have required DeFi front-end service providers to report as “brokers” under Form 1099-DA, effective January 1, 2027. Congress passed a joint resolution repealing those regulations, and President Trump signed it into law in 2025. Form 1099-DA information reporting is now limited to custodial brokers — centralized exchanges and hosted wallet providers. Unhosted wallets, DeFi protocols, validators, and miners are not subject to broker reporting obligations under current law. DeFi participants nonetheless remain responsible for self-reporting all income and gains on their tax returns, as the repeal of the reporting rules does not affect underlying tax liability. An experienced US tax attorney can help ensure your DeFi transactions are correctly reported even in the absence of third-party information reporting.

What is the PARITY Act and how does it affect my crypto taxes?

The Digital Asset Protection, Accountability, Regulation, Innovation, Taxation, and Yields Act (H.R. 8899) is a bipartisan House bill introduced May 19, 2026, that would make the most significant changes to US crypto tax law since the IRS first classified cryptocurrency as property. Its key provisions — if enacted — would extend wash-sale rules to all digital assets (eliminating loss-harvesting strategies), exempt GENIUS Act-compliant stablecoin sales from gain or loss recognition, create a $200 de minimis exemption for stablecoin payments, allow active traders to elect mark-to-market accounting, and defer staking income until point of sale. The bill has not yet passed the House Ways and Means Committee as of September 2026. None of its provisions are current law. However, investors should treat the wash-sale extension as a near-term planning threat and act on loss-harvesting opportunities now. An experienced US tax attorney can model the specific impact on your portfolio.

Should I make a voluntary disclosure for prior-year crypto under-reporting?

If you have failed to report crypto income in prior years, the IRS Voluntary Disclosure Practice may allow you to come into compliance with reduced penalties and without criminal referral. With Form 1099-DA now generating IRS matching data from 2025, the risk of audit-triggered discovery is rising. An experienced US tax attorney should be engaged immediately to assess your exposure and guide you through the voluntary disclosure process before the IRS contacts you.

Should I consult a US tax attorney or a CPA for crypto tax advice?

Both are valuable, but an experienced US tax attorney provides attorney-client privilege for communications related to potential tax disputes and can provide legal advice on complex characterization questions — such as whether your DeFi income is ordinary income or capital gain, whether your trading activity qualifies for mark-to-market treatment, or how the GENIUS Act’s jurisdictional carve-out affects your stablecoin business — that go beyond tax preparation. For complex crypto portfolios, multi-year under-reporting, or international account issues, engaging a top US tax attorney is strongly advisable.

Disclaimer

This article provides general information on US cryptocurrency tax and regulatory developments current as of September 7, 2026. It is not legal or tax advice and does not create a solicitor-client or attorney-client relationship. Laws and regulations in this area are subject to rapid change — in particular, the CLARITY Act (Senate cloture vote September 15, 2026), the PARITY Act (pending House Ways and Means), GENIUS Act implementing regulations, and Form 1099-DA cost basis reporting rules are all actively evolving, and legislative or regulatory status may have changed since this review date. Individuals and businesses with US crypto tax obligations should consult an experienced US tax attorney for advice tailored to their specific circumstances. To discuss your situation with a knowledgeable tax lawyer, contact Rotfleisch & Samulovitch P.C. through taxlawyer.com.