US Lawmakers Propose Digital Asset PARITY Act to Reform Crypto Tax Rules

US draft sets stablecoin tax exemptions and income rules, but sparks debate over limited focus beyond Bitcoin.

US lawmakers Max Miller and Steven Horsford released a discussion draft on Thursday aimed at reshaping how the federal tax code treats digital assets. The proposal, titled the “Digital Asset PARITY Act,” would amend the Internal Revenue Code of 1986 and introduce clearer rules for crypto taxation. While supporters argue the draft could bring needed certainty, critics say it may still fall short for major parts of the industry.

US Draft Proposes Tax Exemptions for Small Stablecoin Transactions

The draft lays out specific stablecoin treatment, including a test for when investors would not owe gains tax. It states that stablecoins would be excluded from gains recognition if the cost basis does not change by more than 1% of 1 or 0.01, depending on the peg amount, as outlined in the discussion draft.

The bill also bars transaction costs incurred to acquire or move regulated dollar-pegged stablecoins from counting toward an investor’s cost basis.

A new de minimis rule would provide a limited exemption for small stablecoin activity. Under the draft, stablecoin transactions below $200 would not trigger tax or reporting requirements, though the total annual cap remains undecided.

Income from lending, staking, or earnings from “passive” validator services would be treated as gross income each year. The draft specifies that these amounts would be measured using fair market value, meaning recipients could face tax obligations even without selling assets.

Debate Grows as US Lawmakers Seek Input on Crypto Tax Reform Draft

The discussion draft has not yet been introduced in Congress. Instead, Miller and Horsford released it to start debate among lawmakers, stakeholders, and market participants on how the US should reform crypto tax policy.

Industry reaction exposed divisions between broader crypto advocates and Bitcoin-focused voices. Cody Carbone, the CEO of crypto advocacy organization Digital Chamber, said in response that the draft’s tax clarity could help activity move onto US soil.

“We need digital asset tax clarity or activity will never fully onshore,” Carbone explained.

Pierre Rochard argued the approach targets stablecoins while missing Bitcoin, calling it “the wrong direction.” He added that stablecoins are neither decentralized nor permissionless, framing them as tied to fiat rather than as equivalent money.