US lawmakers have unveiled a bipartisan effort to modernize the treatment of digital assets in the federal tax code, with a particular focus on stablecoins, everyday transactions, staking and mining rewards.
Representatives Max Miller (R-OH) and Steven Horsford (D-NV) released a draft Digital Asset PARITY Act, which aims to provide clearer, more practical tax rules for regulated dollar-pegged stablecoins and reduce unnecessary reporting burdens for routine crypto payments so that daily transfers do not trigger capital gains reporting requirements for transactions under a certain amount.
The proposal also aims to clarify how revenues are generated from digital asset trading and extend established securities lending tax principles to qualifying digital asset loans, bringing parity for virtual currencies within existing financial rules.
In addition, the framework would provide taxpayers with flexibility in recognizing revenue from staking and mining awards by allowing deferrals under specific conditions, addressing concerns about “phantom revenue” generated before assets are sold.
Says Congressman Miller,
“The U.S. tax code has failed to keep pace with modern financial technology. This bipartisan legislation brings clarity, equality, 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 is playing by the same rules.”
The lawmakers also propose to apply wash sale and constructive sale rules to digital assets to prevent abuse of tax shelter strategies and to modernize the rules for charitable deductions for highly liquid digital assets, reflecting a broad push to align crypto taxation with traditional financial systems and reduce ambiguity in the Internal Revenue Code.
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Featured image: Shutterstock/prodigital art/Natalia Siiatovskaia