A bipartisan duo in the U.S. House of Representatives is circulating a bill that would simplify tax rules for investors, traders and developers by explaining how they would handle filing taxes on gambling, low-value transactions and wash sales.
Representatives Max Miller of Ohio and Steven Horsford of Nevada unveiled the Protecting, Accounting, Regulating, Innovation, Taxing, and Returning on Digital Assets (PARITY) Act on December 20. The proposal aims to modernize the 1986 Internal Revenue Code by eliminating excessive taxes on everyday crypto transactions, addressing “phantom income,” and closing loopholes that lawmakers say invite 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 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 specific tax breaks for regulated stablecoins, optional tax deferral on staking and mining rewards, and new rules that more closely align digital assets with traditional securities and commodities. It would exempt capital gains tax on low-value stablecoin transactions under $200, as long as the tokens are pegged to the dollar, actively traded, and issued by a federally regulated entity.
The bill would also apply long-standing wash sale rules to cryptocurrencies, preventing traders from realizing tax losses while holding similar positions. Additionally, it proposes a mark-to-market accounting election for active digital asset traders, requiring annual recognition of profits and losses based on fair market value. A separate provision applies the “constructive sale” doctrine to cryptocurrencies, targeting derivative-based 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 who trade cryptocurrencies through US brokers. While most of the provisions would take effect upon enactment, the stablecoin exemption would begin in fiscal 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 discussion draft of 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.”
