New York Lawmaker Proposes 0.2% Crypto Tax on Stablecoin Transactions

A New York state lawmaker has argued that stablecoins should not be exempt from the state’s proposed cryptocurrency tax, a position that underscores the growing scrutiny of digital assets in the regulatory and fiscal domains. Assemblymember Phil Steck, who introduced the legislation, stated that stablecoins, despite their role in facilitating everyday transactions, should not receive special treatment that other forms of digital currency do not. “I don’t think that there should be some exemption from a tax on crypto if you buy it for the purpose of using it as a currency,” Steck said [1]. His proposal includes a 0.2% excise tax on all crypto transactions in New York, with the estimated annual revenue—$158 million—intended to support school-based substance abuse programs in upstate regions [1].

Stablecoins, which are typically pegged to the U.S. dollar and backed by reserves such as cash or Treasury securities, have been viewed by some as a safer and more functional alternative to volatile cryptocurrencies like Bitcoin. However, Steck has questioned their utility in everyday transactions, noting that they often serve more as a speculative or trading tool than a true medium of exchange [1]. He also emphasized that the tax would not include exemptions for high-frequency trading or intra-account transfers, which he described as economically unproductive and similar to gambling [1].

The proposed tax comes at a time when regulatory interest in stablecoins is intensifying. Following the passage of the GENIUS Act earlier this year, the stablecoin sector is expected to see increased competition and scrutiny, particularly from major financial institutions like Bank of America and Citigroup [1]. Steck’s position aligns with broader national efforts to bring crypto assets into a more structured and transparent regulatory framework. For example, the U.S. House of Representatives has passed the CLARITY Act, which aims to extend the jurisdiction of the Commodity Futures Trading Commission over digital asset trading [1].

Despite Steck’s advocacy for a broad-based tax, concerns have been raised by industry observers and tax professionals. Nick Slettengren, CEO of Count on Sheep, a tax preparation service, warned that the bill could penalize routine account management practices, such as moving funds between checking and savings accounts [1]. He added that such penalties could lead to confusion, over-collection, and disputes among users, especially when there is no financial gain involved in the transaction [1].

The debate also extends to broader fiscal and environmental considerations. Steck criticized Wyoming’s recent launch of a state-backed stablecoin, the Frontier Stable Token (FRNT), for its high energy costs. However, he appeared to conflate proof-of-work and proof-of-stake models and underestimated the relative efficiency of modern blockchain networks [1]. His comments highlight a knowledge gap that could influence the design and implementation of future crypto-related legislation.

While Steck’s bill has yet to receive detailed feedback from his colleagues in the New York Assembly, the proposal signals a potential shift in how digital assets may be treated under tax law. The outcome will depend on a range of factors, including political will, economic impact assessments, and the broader push for innovation in the digital asset sector. The debate has already sparked discussions among lawmakers, financial institutions, and industry participants, who are weighing the balance between fostering crypto growth and ensuring tax equity and regulatory clarity [1].

Source:

[1] Stablecoins Not Exempt New York Crypto Tax Lawmaker Says (https://decrypt.co/336030/stablecoins-not-exempt-new-york-crypto-tax-lawmaker-says)