Daines ADAPT Act Pairs Stablecoin Relief With Wash Sales

Sen. Steve Daines (R-MT) on Sept. 30, 2026, unveiled the Aligning Digital Assets with Principles of Taxation Act — the ADAPT Act — a Senate Finance Committee member's bid to rewrite how the Internal Revenue Code treats crypto. Cosponsored by Sens. Tim Scott (R-SC), Cynthia Lummis (R-WY), and Bernie Moreno (R-OH), the package pairs payment relief for regulated dollar stablecoins and small network fees with wash-sale and constructive-sale rules that stock investors have lived under for decades.

The timing is deliberate. Two weeks after the Senate failed cloture on the market-structure CLARITY Act 49–50, and two weeks after the House Ways and Means Committee advanced its own Digital Asset Tax Certainty Act (H.R. 10357) by a 38–5 vote, Daines is trying to keep tax modernization moving even as the broader market-structure fight stalls.

What the ADAPT Act would change

The official section-by-section summary from Daines' office runs through 14 substantive sections plus definitions. At a high level, the bill does four things:

• Payment relief: New IRC §1034 would generally prevent recognition of gain or loss when a taxpayer uses a covered payment stablecoin to buy products or services.
• Fee relief: New IRC §1044 would exclude gain or loss on digital assets used to pay network, gas, priority, tip, commission, or transfer-tax costs of $10 or less per economic transaction.
• Anti-abuse parity: Wash-sale rules (§1091) and constructive-sale rules (§1259) would extend to traded digital assets, with qualified U.S. dollar stablecoins carved out.
• Staking, lending, and institutional plumbing: Residence-based sourcing for validation income, securities-lending-style nonrecognition for qualifying digital-asset loans, mark-to-market elections for dealers and traders, a foreign-investor trading safe harbor, staking safe harbors for exchange-traded trusts and tax-exempts, and a Treasury mandate to guide DAO redomiciling.

None of this is current law. ADAPT is proposed legislation that still needs committee action, floor votes in both chambers, and a presidential signature. Most consumer-facing relief would apply only to transactions after Dec. 31, 2026, even if the bill moves quickly.

Stablecoin payments: cash-like treatment with GENIUS Act gates

Under IRS Notice 2014-21 , digital assets are property. That classification means every disposition — including buying a coffee with a dollar-pegged token — can require a gain-or-loss calculation. The foreign-currency personal-transaction exclusion in §988(e) does not apply because stablecoins are not currency.

ADAPT's answer is new §1034. According to the Senate summary, no gain or loss would be recognized when a covered payment stablecoin buys products or services. Investment sales and exchanges stay outside the rule. To qualify, a token must:

1. Be issued by a permitted U.S. or foreign issuer under the GENIUS Act 2. Appear on a Treasury list, published at least quarterly, of stablecoins that traded within 3% of $1.00 over the preceding 12 months 3. Have been acquired by the taxpayer within that same 3% band of $1.00

Traders, brokers, and dealers in stablecoins are excluded, as are taxpayers using a non-dollar functional currency. Eligible consumer transactions would also be exempt from Form 1099-DA broker reporting under §6045, with brokers allowed to rely on customer certifications for facts they cannot reasonably verify.

The Crypto Times reported the bill as a 56-page package; CryptoBriefing described the draft as circulating in 13 sections the week of Sept. 23–25 before formal introduction. Both accounts match the public text and summary posted by Daines' office.

The $10 network-fee de minimis

Paying a gas fee in ETH or SOL is itself a property disposition today. ADAPT's new §1044 would stop recognition when the total value used for transaction costs is $10 or less. Covered costs include network, gas, base, and priority fees and tips — whether paid to a person, a protocol, or burned — plus commissions and transfer taxes for taxpayer-initiated ledger transactions.

Costs belonging to the same economic transaction would be aggregated, including series structured to stay under the cap. The relief would exclude:

• Traders, brokers, and dealers
• Businesses that batch or facilitate validation for others
• Taxpayers who initiated more than 5,000 digital-asset transactions in the prior year
• Positions already marked to market under §475

Basis would be adjusted so unrecognized gain or loss is not duplicated elsewhere. Eligible fee dispositions would also sit outside wash-sale treatment and transaction-level broker reporting, subject to aggregate reporting Treasury may require.

Wash sales and constructive sales come to crypto

For active traders, the headline trade-off is §1091. The wash-sale rule currently disallows a loss when a taxpayer buys substantially identical stock or securities within 30 days before or after a sale. Because the IRS treats crypto as property rather than securities, investors have been able to sell at a loss, repurchase immediately, and keep both the deduction and the economic exposure.

ADAPT would expand §1091 to "specified assets," covering stock, securities, and traded digital assets other than qualified U.S. dollar stablecoins. Tokenized or bridged assets that are economically equivalent would count as substantially identical. Exceptions include assets acquired through staking or mining rewards, regular acquisitions reported as ordinary income, de minimis fee dispositions under §1044, and mark-to-market positions. The rule would apply to sales after enactment, would not reach digital assets acquired before enactment, and would delay broker wash-sale reporting for non-security digital assets until 2028.

Constructive-sale rules under §1259 would likewise reach appreciated digital-asset positions (again excluding qualified dollar stablecoins), treating tokenized and bridged equivalents as substantially identical. Pre-enactment hedges would be protected.

The Defiant framed the package as payment relief paired with restricted loss harvesting — a fair description of the political bargain: ease everyday use, close strategies equity investors cannot use.

Staking, lending, and institutional rails

Several sections aim at institutional adoption rather than retail payments:

• Sourcing (new §863(f)): Validation-supporting income (staking, mining, related activity) would be U.S.-source for U.S. persons and foreign-source for foreign persons, with branch rules and mining attribution based on equipment and personnel location. The bill expressly leaves timing of reward inclusion unresolved — Rev. Rul. 2023-14's dominion-and-control approach remains the baseline unless other guidance changes it.
• Lending (§1058): Qualifying loans of traded digital assets would get securities-lending-style nonrecognition, with pass-through of protocol distributions and staking-related amounts to the extent Treasury provides. Related UBTI, RIC, and foundation rules would be updated for digital-asset loan payments.
• Mark-to-market (new §475(g)): Dealers and traders in covered digital assets could elect mark-to-market on terms parallel to securities dealers, with §199A specified-service parity so crypto trading businesses do not enjoy a deduction edge over traditional counterparts.
• Foreign trading safe harbor (new §864(b)(2)(C)): Foreign persons trading traded digital assets through U.S. brokers or for their own account would generally avoid U.S. trade-or-business status; dealers are carved out of the own-account prong.
• ETP staking (new §7701(p)): Covered exchange-listed digital-asset investment trusts could stake, unstake, borrow for redemptions, and respond to technology changes without that counting as a "power to vary." Publicly traded partnerships would get clearer qualifying-income treatment for staking rewards and digital-asset gains.
• Tax-exempt staking (new §512(b)(20)): Passive validation income could be excluded from UBTI when the organization does not substantially participate — though debt-financed property rules under §514 would still apply.
• Charitable gifts: Widely traded digital assets (market cap above $500 million plus liquidity tests) would join the appraisal exception for large noncash donations.
• DAO redomiciling: Treasury would have 12 months after enactment to issue guidance helping foreign DAO foundations reorganize as U.S. corporations, with transitional safe harbors for entities organized before Sept. 24, 2026.

How ADAPT relates to the House tax bill and CLARITY

ADAPT is not a substitute for market structure. The CLARITY Act failed a Senate procedural vote 49–50 on Sept. 15; ADAPT does not assign SEC versus CFTC jurisdiction or rewrite commodity/security definitions for trading venues.

It does overlap the House Digital Asset Tax Certainty Act. Ways and Means approved H.R. 10357 by 38–5 on Sept. 16, with provisions on payment costs, lending, staking, and wash sales, according to CryptoSlate and Daines' own framing that the Senate draft is meant to line up with that House effort. Committee approval is not House passage, and neither chamber has enacted a final tax package.

Politically, tax may be the narrower path after market structure stalled. Daines has been previewing the framework since a July Senate Finance Committee hearing; unveiling a full text with three Republican cosponsors keeps a concrete vehicle on the table heading into the rest of 2026.

Effective dates investors should actually calendar

From the official at-a-glance table:

• After Dec. 31, 2026: Stablecoin payment nonrecognition; de minimis network fees; mark-to-market / §199A parity; foreign trading safe harbor; trust/PTP staking rules (trusts may elect earlier); charitable appraisal exception; tax-exempt staking UBTI exclusion
• After enactment: Staking/mining sourcing; digital-asset lending nonrecognition; wash sales (broker reporting for non-security digital assets delayed to 2028); constructive sales
• Within 12 months of enactment: Treasury DAO redomiciling guidance
• Taxable years ending after introduction: Bearer-obligation clarifications for qualified dollar stablecoins

Until Congress acts, nothing about coffee purchases, gas fees, or tax-loss harvesting changes for the current tax year.

What this means for investors

For payment users and builders of GENIUS Act–compliant stablecoin rails, ADAPT is the clearest Senate signal yet that Congress wants cash-like tax treatment for regulated dollar tokens — with a tight Treasury list and a 3% peg band that keeps depegged coins out. That could matter more for merchant adoption than another round of market-structure theater.

For traders, the wash-sale and constructive-sale extensions are the core risk. Strategies that harvest losses while rolling into bridged or tokenized equivalents would face the same economic-identity tests that already cabin equity loss harvesting. Positions acquired before enactment would be protected under the draft's transition rules, but anyone planning year-end harvesting should assume the loophole's days are numbered if a House–Senate tax compromise forms.

For institutions, the staking, lending, mark-to-market, and foreign safe-harbor sections are the quieter story. They are designed to let U.S. ETPs, custodians, and cross-border capital use familiar Code frameworks instead of living on revenue procedures and no-action gray zones. The bill still leaves the timing of staking-reward inclusion to existing IRS doctrine — a gap industry groups have already flagged on the House side.

ADAPT will not rewrite crypto taxes overnight. It is a detailed Republican Senate draft that mirrors a bipartisan House committee bill while market structure remains stuck. The concrete numbers that matter today are not prices — they are the 3% peg band, the $10 fee cap, the 5,000-transaction exclusion, the $500 million widely-traded threshold, the Dec. 31, 2026 consumer effective date, and the 38–5 House committee vote that shows tax reform still has a path even after CLARITY's 49–50 cloture failure.