U.S. lawmakers Steven Horsford (D-Nev.) and Max Miller (R-)$ ext{Ohio}$ have re-introduced the Digital Asset Protection, Accountability, Regulation, Innovation, Taxation and Yields (PARITY) Act to overhaul how the IRS treats cryptocurrency transactions.
The bipartisan bill, first seen in draft form last December, aims to update federal tax approaches to digital assets. The latest version of the legislation moves away from simple transaction thresholds toward a more complex basis-recognition model.
New Rules for Stablecoins and Wash Sales
Under the revised text, the bill alters how taxpayers recognize gains or losses on regulated payment stablecoins. The legislation states, "In the case of any sale of a regulated payment stablecoin, no gain or loss shall be recognized on such sale unless the taxpayer’s basis in such stablecoin is less than 99 percent of the redemption value of such stablecoin."
This new language removes a previously proposed $200 threshold for de minimis exemptions. It also establishes a deemed basis of $1 for exchanges, distinguishing them from direct sales.
The updated draft also extends wash sale rules to digital asset transactions. This move aligns the bill with existing legislative trends, such as the provisions Senator Cynthia Lummis (R-Wyo.) included in her tax bill last year.
Additionally, the PARITY Act seeks to create a legal distinction between trading activities and "passive staking." This distinction could significantly alter how investors report income generated from network participation.
While the bill's future remains uncertain, industry participants expect a heavy push to include crypto provisions in upcoming tax legislation. Congress is expected to address broader tax policy in the coming months, potentially through a reconciliation bill.
