On December 20, a bipartisan pair of US lawmakers introduced new crypto tax legislation to modernize the emerging industry. The bill, called the Digital Asset PARITY Act, was sponsored by Reps. Max Miller and Steven Horsford.
The legislation proposes to close the industry’s most lucrative “wash sale” loophole in exchange for significant tax relief on staking rewards and everyday payments.
Key Provisions of the Digital Asset PARITY Act
The bill’s most financially consequential provision is the application of “wash sale” and “constructive sale” rules to digital assets.
Under current regulations, crypto assets are treated as property, allowing traders to sell a losing position to claim a tax deduction and immediately buy back the same asset. This loophole has been a windfall for traders, creating a gap in tax revenue that the federal government has been eager to address.
By aligning crypto with equity market rules, the legislation closes a gap that the authorities previously estimated could raise billions in federal revenue. If passed, the rule would require traders to wait 30 days before repurchasing an asset to claim a loss, fundamentally altering portfolio management strategies during market downturns.
“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,” Miller said.
Introduces ‘De Minimis’ Exemption
To balance the tighter trading rules, the legislation offers a substantial concession to the supply side of the crypto economy. The bill establishes an elective framework that allows miners and validators to defer taxes on staking rewards for up to five years or until they sell the assets.
This addresses the industry’s long-standing complaint about “phantom income.” This issue arises when validators receive rewards in illiquid tokens that they cannot readily sell to cover tax liabilities, creating significant operational challenges.
By shifting the taxable event to the point of sale rather than at the time of receipt, the bill removes a considerable liquidity drag on US-based mining and staking operations.
For retail users, the bill introduces a “de minimis” exemption designed to normalize the use of digital dollars. This proposal would eliminate capital gains taxes on transactions under $200 when users transact with stablecoins issued by firms compliant with the recently enacted GENIUS Act.
This provision ensures that spending crypto on everyday purchases does not trigger a capital gains calculation for each transaction, removing a long-standing friction point that has hindered crypto’s use as a practical medium of exchange.
“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,” Horsford explained.
The proposal also tightens rules on charitable giving by distinguishing between liquid assets and speculative tokens to prevent valuation abuse. This change aims to ensure the tax code supports legitimate philanthropy without becoming a vehicle for tax avoidance.