A bipartisan duo in the US House of Representatives is circulating a draft bill that would streamline tax rules for investors, traders and developers by explaining how they would handle reporting their taxes on stakes, low-value transactions and wash sales.
Representatives Max Miller of Ohio and Steven Horsford of Nevada unveiled the Digital Asset Protection, Accountability, Regulation, Innovation, Taxation, and Yields (PARITY) Act on December 20. The proposal aims to modernize the Internal Revenue Code of 1986 by eliminating excessive taxation of everyday crypto transactions, addressing “phant tax loopholes that phant lawmakers say invite.
“America’s tax code has failed to keep pace with modern financial technology,” said Miller, “This bipartisan legislation brings clarity, parity, fairness and common sense to the taxation of digital assets. It protects consumers who make 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 deferrals for stakes and mining rewards, and new rules that align digital assets more closely 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 reaping tax losses while maintaining similar positions. In addition, it proposes a mark-to-market accounting option for active digital asset traders, which requires annual recognition of gains and losses based on fair market value. A separate provision applies the “constructive sale” doctrine to crypto, targeting derivative hedging strategies that defer taxes 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 trading crypto through US brokers. While most provisions would take effect upon enactment, the stablecoin exemption would begin in tax years starting after December 31, 2025.
“Today, even the smallest crypto transaction can trigger a tax assessment, while other areas of the law lack clarity and invite abuse,” Horsford said. “Our discussion draft for the Digital Asset PARITY Act takes a targeted approach that provides a level playing field for both consumers and businesses to benefit from this new form of payment.”
