Will stablecoins rise to the occasion as the US imposes a 1% tax on cash remittances?

The new regulations from the U.S. Department of the Treasury and the IRS will take effect on January 1, 2026. For cross-border remittances, remittance service providers are required to withhold a 1% tax on qualifying transactions. The key point of this measure is— it only taxes specific remittance methods, which conveniently opens a window for cryptocurrencies and stablecoins.

Policy Core: Who Needs to Pay Taxes and Who Doesn’t

The taxation logic of the new regulation is straightforward:

The underlying logic behind this design is: the U.S. tax authorities want to track traceable fund flows. Transfers made through bank accounts have clear records and are easier to regulate; whereas cash and physical instruments are harder to trace, making them the focus of taxation.

Why Implement This Policy Now

The background of this news reveals the real reason. The U.S. is facing significant fiscal pressure:

• The U.S. fiscal deficit in 2026 may exceed $2 trillion, accounting for 7% of GDP
• Interest payments on national debt already account for 35% of fiscal revenue and continue to rise
• Debt issued during the low-interest-rate period worth trillions of dollars needs to be refinanced at higher rates

This is part of the “Big and Beautiful” tax and spending bill pushed by the Trump administration. Simply put, the government needs money, and this 1% remittance tax is a new revenue source. The tax applies to all overseas remittance recipients, including U.S. citizens and residents.

Market Impact: Rising Costs for Traditional Remittances

This policy directly affects the traditional remittance market. Cash and money orders are common methods for many cross-border remittances, especially from the U.S. to developing countries. The 1% rate may seem modest, but for frequent remitters, it creates tangible cost pressures.

According to related reports, some tax experts believe that “cryptocurrency and stablecoin transfers are not considered taxable remittance transfers.” This is key information—stablecoins may not fall within the scope of “physical payment tools” subject to this tax, but the actual situation remains uncertain.

Potential Opportunities for Cryptocurrencies

Here lies an interesting policy gap. If stablecoins are ultimately confirmed to be outside the scope of taxation:

• Stablecoins could become tools to circumvent the 1% remittance tax
• Cross-border payments could be conducted via stablecoins, reducing costs
• This could promote the adoption of stablecoins in cross-border remittances

Of course, this depends on the final clarification by regulators. The current statement in the news is “the actual situation has not yet been determined,” meaning there is still uncertainty. But from a policy perspective, the likelihood of stablecoins being classified as digital assets rather than “physical payment tools” and thus falling under the tax scope is relatively low.

Summary

The introduction of the 1% U.S. remittance tax reflects the government’s attempt to “bite the bullet” under fiscal pressure. While this policy will increase costs for traditional remittances, it also opens space for stablecoins and cryptocurrencies in cross-border payments. In the short term, it may raise the costs of traditional remittance markets; in the long term, it could accelerate the migration of cross-border remittances toward digital assets. Ultimately, the key will be the regulators’ final stance on stablecoins, which will directly determine whether stablecoins can truly become a “lower-cost alternative” in cross-border payments.