- VISA will allow U.S. card issuers to settle transactions directly with Visa using Circle USD (USDC), a stablecoin.
- Financial institutions receiving USDC must maintain detailed transaction records to report accurate cost basis for tax purposes to the IRS.
- The first banks to accept USDC settlements are Cross River Bank and Lead Bank, with wider availability planned for 2026.
- The IRS classifies stablecoins like USDC as taxable digital assets subject to reporting, despite their intended $1 peg.
- USDC and other stablecoins can experience price fluctuations, creating potential capital gains or losses that taxpayers must report.
Visa announced that U.S. card issuers can now settle payments directly with Visa using Circle USD (USDC), a digital stablecoin pegged to the U.S. dollar. This rollout began in 2024 with initial participation by Cross River Bank and Lead Bank. Broader access is expected across the U.S. in 2026, enabling faster settlement options including weekends.
According to the press release, companies will benefit from extended settlement times of up to seven days per week. However, those receiving USDC settlements must keep timestamped transaction records and file them with the IRS. This requirement ensures the accurate reporting of taxable events based on cost basis for each transaction.
The IRS defines digital assets, including stablecoins such as USDC, as taxable property. These assets are “digital representations of value recorded on cryptographically secured distributed ledgers.” Despite being pegged to $1, stablecoins can deviate from this value, triggering taxable capital gains or losses on trades. The IRS requires taxpayers to report these changes on tax returns.
USDC itself has historically traded as low as the $0.80 range before government reserves stabilized the coin. Other stablecoins have shown significant price volatility, with examples such as USDT fluctuating between $0.001 and $1,000 and stablecoins like DAI, USDE, and TUSD moving outside the $1 peg at times. Several projects like Terra, Fei, and Iron collapsed completely, leading to losses for holders.
Visa and Circle, a company valued at $20 billion and partnered with cryptocurrency exchange Coinbase, which is worth $67 billion, have emphasized the benefits of stablecoin settlements, including “modernized liquidity” and “interoperability.” The tax compliance responsibilities rest with the entities receiving the stablecoins, as accurate tax reporting is mandatory.
For further details, see the original USA.visa.com/about-visa/newsroom/press-releases.releaseId.21951.html”>Visa press release and Circle CEO Jeremy Allaire’s announcement on X. Information about the IRS classification of digital assets is available on the IRS official site and digital asset income reporting.
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