A bipartisan pair in the U.S. House of Representatives is distributing a draft bill designed to simplify tax regulations for investors, traders, and developers, detailing how they should report taxes on staking, low-value transactions, and wash sales.
Representatives Max Miller from Ohio and Steven Horsford from Nevada presented the Digital Asset Protection, Accountability, Regulation, Innovation, Taxation, and Yields (PARITY) Act on December 20. This legislation intends to update the Internal Revenue Code of 1986, mitigating excessive taxes on ordinary crypto transactions, addressing “phantom income,” and closing loopholes that lawmakers claim encourage tax evasion.
“America’s tax system has not kept up with modern financial technologies,” stated Miller. “This bipartisan bill introduces clarity, parity, fairness, and practicality to the taxation of digital assets. It safeguards consumers engaging in routine purchases, clarifies the rules for innovators and investors, and enhances compliance so that everyone abides by the same standards.”
The PARITY Act proposes specific tax exemptions for regulated stablecoins, optional tax deferral for staking and mining rewards, and new regulations aligning digital assets with traditional securities and commodities. It exempts capital gains taxes on low-value stablecoin transactions under $200, given that the tokens are dollar-pegged, actively traded, and issued by a federally regulated entity.
The bill would also enforce existing wash sale rules in the crypto space, stopping traders from claiming tax losses while maintaining similar positions. Furthermore, it suggests a mark-to-market accounting option for active digital asset traders, mandating annual recognition of gains and losses based on fair market value. A separate clause adapts the “constructive sale” doctrine for crypto, targeting derivative-based hedging strategies that indefinitely defer taxes.
Additional provisions encompass granting nonrecognition treatment to specific digital asset loans, excluding NFTs and thinly traded tokens, and extending tax advantages to foreign investors trading crypto through U.S. brokers. While the majority of the provisions would take effect upon enactment, the stablecoin exemption would commence in tax years beginning after December 31, 2025.
“Today, even the smallest crypto transactions can trigger tax calculations while other legal areas lack clarity and facilitate abuse,” remarked Horsford. “Our discussion draft of the Digital Asset PARITY Act adopts a focused strategy that ensures a level playing field for consumers and businesses to benefit from this new payment method.”
