A bipartisan duo of House lawmakers unveiled the "Digital Asset PARITY Act" late Friday, proposing a sweeping reconfiguration of the U.S. crypto tax code that trades retail loopholes for institutional clarity. Reps. Max Miller (R-OH) and Steven Horsford (D-NV) released the discussion draft to address two of the industry’s loudest complaints, "phantom income" and friction on payments, while handing the IRS a long-sought victory on wash trading.
The "Carrot": Staking Deferrals and Stablecoin Use
The draft legislation targets the "phantom income" problem, a critical pain point for U.S.-based validators and miners who currently owe taxes on rewards the moment they are received, regardless of liquidity. Under the PARITY Act, taxpayers could elect to defer recognizing staking and mining rewards as income for up to five years, or until the assets are sold. This provision removes the immediate tax liability that often forces validators to sell rewards instantly to cover IRS bills, a dynamic that suppresses asset prices.
For retail users, the bill introduces a "de minimis" exemption for stablecoin transactions under $200. Crucially, this exemption applies only to regulated, dollar-pegged stablecoins issued by firms compliant with the proposed GENIUS Act. This effectively treats small stablecoin payments like cash, eliminating the need to calculate capital gains on a cup of coffee, a friction point that has historically crippled crypto’s utility as a medium of exchange.
"Today, even the smallest crypto transaction can trigger tax calculation while other areas of the law lack clarity and invite abuse," noted Rep. Horsford in the release.
The "Stick": Wash Sale Rules Apply
To balance the ledger, the bill formally extends the "wash sale" rule to digital assets. Currently, crypto traders can sell tokens at a loss to harvest tax deductions and immediately repurchase the same asset, a strategy illegal in equity markets. The PARITY Act would force crypto traders to wait 30 days before repurchasing an asset if they wish to claim the loss, aligning crypto market structure with traditional securities.
The proposal also extends securities lending tax principles to digital assets, ensuring that lending crypto is not a taxable event, a move likely to streamline operations for prime brokers and institutional lending desks. While the bill remains a discussion draft, it signals a maturing legislative approach: moving beyond broad bans toward specific, trade-off-based regulation.
