New PARITY Act Targets Crypto Tax Clarity For Consumers And Investors
TLDR
- The PARITY Act proposes tax exemptions for stablecoin payments in daily use.
- Miners and stakers could defer taxes on digital rewards under the proposal.
- The bill applies wash-sale rules and mark-to-market elections to crypto assets.
- Lawmakers aim to align cryptocurrency taxation with rules governing stocks and commodities.
As digital asset usage grows in the United States, lawmakers are working to align crypto taxation with long-established financial standards. On December 20, 2025, Representatives Steven Horsford (D-NV) and Max Miller (R-OH) introduced the Digital Asset PARITY Act, a bipartisan discussion draft aimed at simplifying tax compliance, protecting consumers, and closing gaps in existing laws that affect cryptocurrency users, miners, traders, and investors.
PARITY Act Seeks Clearer Rules for Crypto Transactions and Stablecoins
The proposed PARITY Act—short for Protection, Accountability, Regulation, Innovation, Taxation, and Yields—introduces several measures to reduce tax burdens and establish consistency for digital asset transactions. One prominent feature would classify regulated, dollar-pegged stablecoins used for payments as cash equivalents. This would exempt small consumer transactions from triggering capital gains taxes, reducing administrative challenges for both taxpayers and the IRS.
The legislation would also clarify tax treatment for foreign investors using U.S.-based crypto platforms. It proposes protections that offer certainty to non-U.S. users trading within regulated digital asset markets, making the U.S. more competitive globally. Other provisions would apply traditional securities-lending tax rules to qualified digital asset loans, bringing crypto transactions closer in line with conventional financial practices.
Lawmakers emphasized the need for modern guardrails that balance innovation with oversight. They argue that existing tax law fails to address the real-world use of crypto, particularly for everyday purchases and non-cash rewards earned through network participation.
Lawmakers Target Mining Rewards and Trader Tax Status
The PARITY Act includes specific provisions designed to resolve long-standing tax issues for miners and stakers. A proposed election mechanism would allow participants to defer tax recognition of digital asset rewards until they sell or use them. This approach aims to eliminate “phantom income” taxation, where individuals owe taxes on rewards before converting them to cash or other assets.
The bill also aims to align professional crypto traders with existing securities markets by permitting a mark-to-market election. This would allow qualifying traders to report income based on fair market value at year-end, mirroring how traditional financial professionals account for gains and losses.
Additional elements of the draft legislation include applying wash-sale rules to digital assets, updating charitable contribution guidelines for cryptocurrency donations, and confirming that passive staking by investment funds does not constitute business activity. These changes aim to eliminate ambiguity and mitigate compliance risks across the digital asset sector.
PARITY Act Opens Door for Industry Input and Further Development
Representatives Horsford and Miller presented the draft as a bipartisan framework, not yet a formal bill, intended to encourage stakeholder feedback. They stated their intention to collaborate with tax experts, regulators, and industry leaders to fine-tune the proposal before legislative introduction.
Lawmakers emphasized that the current U.S. tax code has not kept pace with technological advancements. With the PARITY Act, they aim to establish a tax structure that reflects the evolving role of digital assets in payments, trading, and investment activities, while maintaining regulatory oversight and ensuring fairness.
The post New PARITY Act Targets Crypto Tax Clarity For Consumers And Investors appeared first on CoinCentral.
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