A bipartisan duo in the U.S. House of Representatives is circulating a bill that would streamline tax rules for investors, traders and developers by spelling out how they would handle reporting their taxes on staking, low-value transactions and wash sales.
Reps. Max Miller of Ohio and Steven Horsford of Nevada unveiled the Digital Asset Protection, Accountability, Regulation, Innovation, Taxation, and Returns (PARITY) Act on Dec. 20. The proposal aims to modernize the 1986 Internal Revenue Code by eliminating excessive taxation on everyday crypto transactions, tackling “phantom revenue” and closing loopholes that lawmakers say incentivize tax abuse.
“The U.S. tax code has failed to keep pace with modern financial technology,” Miller said. “This bipartisan legislation brings clarity, parity, fairness and common sense to digital asset taxation. It protects consumers making everyday purchases, ensures the rules are clear for innovators and investors, and strengthens compliance so everyone plays by the same rules.”
The PARITY Act includes targeted tax exemptions for regulated stablecoins, optional tax deferral on staking and mining rewards, and new rules more closely aligning digital assets with traditional securities and commodities. It would exempt capital gains tax on low-value stablecoin transactions below $200, provided the tokens are dollar-pegged, actively traded and issued by a federally regulated entity.
The bill would also apply long-standing wash sale rules to crypto, preventing traders from harvesting tax losses while maintaining similar positions. Additionally, it provides a mark-to-market accounting choice for active traders of digital assets, requiring annual accounting of gains and losses based on fair market value. A separate provision applies the “constructive sale” doctrine to cryptocurrencies, targeting derivatives-based hedging strategies that defer tax indefinitely.
Other measures include granting non-recognition treatment to certain digital asset loans, excluding NFTs and thinly traded tokens, and extending tax benefits to foreign investors who trade cryptocurrencies through U.S. brokers. While most of the provisions would take effect upon enactment, the stablecoin exemption would take effect in tax years beginning after December 31, 2025.
“Today, even the smallest crypto transaction can trigger tax calculations, while other areas of the law lack clarity and invite abuse,” Horsford said. “Our proposed discussion on the Digital Asset PARITY Act takes a targeted approach that provides a level playing field for consumers and businesses to benefit from this new form of payment.”
