A bipartisan duo in the U.S. House of Representatives has introduced a new discussion draft aimed at overhauling the digital asset tax landscape, targeting everything from coffee-shop stablecoin purchases to industrial-scale mining operations.
Representatives Max Miller (R-Ohio) and Steven Horsford (D-Nev.) unveiled the Digital Asset PARITY Act late this week. The proposal attempts to thread a needle between industry demands for clarity and the Treasury’s need for revenue, offering exemptions for small users while tightening the screws on traders.
The ‘Coffee Cup’ Exemption
The headline provision for retail users is a de minimis exemption for stablecoins. Under the current draft, capital gains taxes would not apply to regulated, dollar-pegged stablecoin transactions under $200. This directly addresses the “coffee cup problem,” where technically every small crypto purchase triggers a taxable event.
The Staking Compromise
For the institutional and validator class, the bill offers a middle ground on the contentious issue of staking and mining rewards. Currently, the IRS often treats these rewards as income the moment they are received, creating “phantom income” tax bills on assets that haven’t been sold.
The PARITY Act proposes an optional five-year deferral. Taxpayers could delay recognizing income from rewards for up to five years, at which point they would be taxed as ordinary income at their Fair Market Value (FMV). This contrasts with Sen. Cynthia Lummis’s previous proposals, which sought to defer taxes indefinitely until the asset was sold.
The Pay-For: Wash Sale Rules
The bill is not purely a tax cut. To offset the revenue impact, the draft explicitly extends “wash sale” rules to digital assets. This would prevent traders from selling a token at a loss to claim a tax deduction and immediately repurchasing it, a common strategy in crypto markets today that is banned in equities.
The proposal also allows eligible traders to elect mark-to-market accounting, aligning crypto trading firms closer to traditional securities dealers.
“Today, even the smallest crypto transaction can trigger tax calculation while other areas of the law lack clarity and invite abuse,” Rep. Horsford stated in the release. “Our discussion draft… takes a targeted approach that provides an even playing field.”
Market Reaction
Markets remained largely flat on the news, reflecting the early stage of the legislation. Bitcoin (BTC) hovered near $88,100 (-0.2%), while Ethereum (ETH) traded around $2,980 (+0.2%), as traders likely priced in the long road ahead for the bill to become law.
