Bipartisan Bill Pushes Crypto Tax Parity With Traditional Markets
A bipartisan effort in Congress is advancing a framework to modernize tax policy for emerging financial technology. U.S. Reps. Steven Horsford (D-Nev.) and Max Miller (R-Ohio) unveiled a discussion draft on Dec. 20 aimed at providing clarity and consistency for the taxation of digital asset activities.
“The Digital Asset Protection, Accountability, Regulation, Innovation, Taxation, and Yields (PARITY) Act targets unnecessary compliance challenges, closes major anti-abuse gaps, and aligns the taxation of digital assets with long-standing tax principles already applied to stocks, commodities, and other financial assets,” the announcement states. The proposal outlines a comprehensive set of amendments to the Internal Revenue (IRS) Code intended to align digital asset taxation with rules long applied to traditional financial markets.
“America’s tax code has failed to keep pace with modern financial technology,” Representative Miller stressed, adding:
This bipartisan legislation brings clarity, parity, fairness, and common sense to the taxation of digital assets. 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.
Among its central provisions, the bill creates a de minimis and deemed-basis framework for regulated, dollar-pegged payment stablecoins, treating digital dollars used for everyday payments like cash and reducing reporting burdens tied to routine transactions. It establishes clearer source-of-income rules for foreign investors trading digital assets on U.S. platforms, extends existing securities-lending nonrecognition principles to qualifying digital asset loans, and formally applies wash-sale rules to actively traded digital assets.
The draft also permits professional digital asset dealers and active traders to elect mark-to-market accounting, bringing parity with securities markets, while applying constructive sale rules to prevent gain deferral through offsetting positions. Additional sections modernize charitable contribution rules by distinguishing highly liquid digital assets from illiquid or speculative tokens and clarify that passive, protocol-level staking by investment funds does not constitute a trade or business under federal tax law.
Representative Horsford opined:
Today, even the smallest crypto transaction can trigger tax calculation while other areas of the law lack clarity and invite abuse. Our discussion draft of the Digital Asset PARITY Act takes a targeted approach that provides an even playing field for consumers and businesses alike to benefit from this new form of payment.
The bill also addresses the long-standing phantom income issue affecting miners and stakers by creating an elective framework that allows taxpayers to defer income recognition on digital asset rewards until a later, defined point, at which time ordinary income is recognized and basis is set for future capital gains treatment. Together, the provisions reflect a coordinated effort to integrate digital assets into the existing tax framework while reinforcing administrable standards and market integrity.
FAQ ⏰
- What is the Digital Asset PARITY Act?
It is a bipartisan proposal to align digital asset taxation with long-standing rules used for stocks, commodities, and other financial assets. - How does the bill treat stablecoin transactions?
It creates a de minimis framework so dollar-pegged payment stablecoins used for everyday purchases are treated more like cash. - Does the proposal address phantom income for miners and stakers?
Yes, it allows taxpayers to defer income recognition on digital asset rewards until a later defined point. - What changes affect crypto traders and dealers?
The bill allows mark-to-market accounting elections and applies wash-sale and constructive sale rules to actively traded digital assets.
