- Draft creates small stablecoin tax safe harbor under 200 dollars
- Staking and mining rewards may be deferred for up to five years
- Extends wash sale, constructive sale and lending rules to digital assets
Bipartisan House lawmakers are moving to reset how the United States taxes digital assets, and their new discussion draft shows how quickly crypto policy is maturing in Washington. Representative Max Miller of Ohio and Representative Steven Horsford of Nevada, both members of the House Ways and Means Committee, have unveiled the Digital Asset PARITY Act, a framework that targets two key friction points: small everyday stablecoin payments and the timing of tax on staking and mining rewards. Their proposal leans on existing securities tax concepts, adds a narrow safe harbor for regulated dollar-pegged stablecoins, and sketches a five-year deferral election for rewards from securing networks, all while trying to close long-standing loopholes that traders have used in traditional markets.
Bipartisan House lawmakers and the Digital Asset PARITY Act
Bipartisan House lawmakers behind the Digital Asset PARITY Act are not starting from zero. For years, tax lawyers, regulators and industry groups have debated how to fit tokens, stablecoins and staking rewards into a code that was written long before blockchains existed. Miller, a Republican from Ohio, and Horsford, a Democrat from Nevada, now offer a detailed draft that tries to set clearer “rules of the road” without turning every innovation into a tax trap. Their bill keeps the focus on digital assets but borrows heavily from familiar concepts that already apply to stocks, bonds and other securities. The politics around this move are important. Under guidance reaffirmed in October 2024, the Internal Revenue Service under the Biden administration treats staking and mining rewards as taxable income at the moment the taxpayer gains dominion and control, even if the tokens stay locked or illiquid. Senator Cynthia Lummis, a Republican from Wyoming and a long-time crypto advocate who has announced she will not seek re-election, responded in July 2024 with legislation that would push taxation of those rewards to the moment of sale instead. Bipartisan House lawmakers now position their own bill as a middle course between immediate taxation and full deferral, signalling that the debate has shifted from “if” to “how” in the eyes of the next Congress and the Trump administration, which has already indicated support for some form of crypto tax relief. Earlier attempts at a de minimis exemption for small crypto transactions also set the stage. Senator Lummis tried to insert a provision that would ignore up to 300 dollars of gain per transaction in a budget reconciliation bill, but the measure did not gather enough votes. Bipartisan House lawmakers have taken that idea and narrowed it, limiting the relief to regulated dollar-pegged stablecoins and capping qualifying payments at 200 dollars, while leaving open the possibility of an annual ceiling so that investors cannot route large trades through many tiny transfers.
Stablecoin tax safe harbor and everyday payments
At the core of the Digital Asset PARITY Act sits a stablecoin safe harbor aimed at everyday spending. Today, someone who uses crypto to buy a coffee or pay a subscription technically triggers capital gains or losses on each purchase, because the code treats the token as property, not cash. Even small swings in price can produce reportable events. The new draft attacks this friction by exempting certain stablecoin transactions from capital gains when the value involved is below 200 dollars, provided the asset meets strict regulatory and pricing criteria. In practice, this would let users tap regulated dollar-pegged stablecoins for routine payments without tracking small gains on every 15-dollar or 50-dollar purchase. The relief is intentionally narrow. The safe harbor applies only to stablecoins issued by an entity that qualifies as a “permitted issuer” under the separate GENIUS Act framework. The token must be pegged solely to the United States dollar and must keep its market price within one percent of one dollar for at least 95 percent of all trading days in the previous twelve months. If a stablecoin regularly trades below 0.99 dollars or above 1.01 dollars, it fails the test. Brokers and dealers cannot rely on this exemption at all, since lawmakers do not want high-frequency intermediaries to mask trading profits as consumer payments. Bipartisan House lawmakers also flag that they are still deciding whether to add an annual aggregate limit so that a user cannot move large investment positions by breaking them into hundreds of sub-200-dollar transfers. This approach deliberately excludes other cryptocurrencies. Payments made with volatile tokens remain fully subject to capital gains rules, even when used for day-to-day purchases. The draft does not touch the core classification of crypto as property for tax purposes, but it carves out a narrow lane where dollar-linked stablecoins can behave more like cash at the point of sale, assuming regulatory approval and a strong price stability record. For merchants and payment processors, the change would remove one of the biggest accounting headaches around stablecoin adoption, provided their payment rails can screen for assets that satisfy the one-percent and ninety-five-percent tests.
Staking reward timing: a five-year deferral compromise
The section on staking and mining rewards may affect the largest number of long-term token holders. Current IRS guidance, confirmed in October 2024, taxes rewards as ordinary income at the moment the taxpayer receives or controls the new tokens. That means a validator who earns tokens each day must value them at the time of receipt, report that amount as income, and then later pay additional tax on any extra gain at sale. This pattern can create tax bills on “paper gains” that vanish if prices fall before liquidation, which many in the industry view as unfair and hard to administer. Senator Lummis proposed a clean alternative: wait until the taxpayer sells or exchanges the reward tokens, then tax the difference between sale proceeds and any basis. Her July 2024 bill would have moved all staking and mining income to that later point. Bipartisan House lawmakers now offer the Digital Asset PARITY Act as a compromise between those positions. Under their draft, taxpayers could elect to defer taxation of staking and mining rewards for up to five years. During that period, the reward tokens would not create immediate income at receipt. After five years, however, any remaining tokens would be taxed as ordinary income based on fair market value, whether or not the holder has sold them. The five-year election gives network participants time to align taxes with cash flow. A validator who expects to hold tokens for two or three years could defer recognition, then either sell when liquidity appears or accept income recognition at the end of the five-year window. This approach reduces the number of valuation points and may ease record-keeping, while still giving the Treasury a predictable timeline for collecting revenue. It also keeps the door closed on indefinite deferral strategies where rewards accumulate for decades untaxed. For miners and stakers, the choice of whether to elect deferral will depend on their risk tolerance, their long-term view of the asset, and their ability to plan for a potential lump-sum tax hit if values rise. The fact that Bipartisan House lawmakers opted for an elective regime rather than a blanket rule suggests they want flexibility for both conservative and aggressive taxpayers.
How Bipartisan House lawmakers reshape wider digital asset rules
Beyond stablecoins and staking, the Digital Asset PARITY Act extends several well-known securities tax doctrines into the digital asset arena. One major move is the explicit application of wash sale rules to cryptocurrencies. Under those rules, an investor cannot sell a token at a loss and then repurchase the same or a substantially identical asset within a short window while still claiming the loss for tax purposes. By importing this concept, the draft closes a strategy that some traders have used to harvest crypto losses while keeping their economic exposure almost unchanged. The bill also extends constructive sale rules, which stop investors from locking in gains through offsetting positions, such as short sales or derivatives, while delaying the actual sale of the original asset and its associated tax. The authors go further by addressing lending and professional trading activity. For qualifying digital asset loans involving fungible, liquid tokens, the draft applies securities-lending principles that treat the loan as a non-taxable event. That means a holder can lend certain widely traded tokens to another party without triggering an immediate gain or loss, as long as the arrangement meets strict conditions. Non-fungible tokens and illiquid or thinly traded assets sit outside this safe treatment, which reflects concerns about valuation and potential abuse. Professional traders in digital assets would gain access to mark-to-market accounting similar to that available under existing Section 475 rules for securities and commodities. At year end, these traders could treat their positions as if they were sold and repurchased at fair market value, recognizing all gains and losses each year rather than tracking individual lots across multiple tax periods. Charitable giving receives its own set of adjustments. Donors who contribute digital assets with a market capitalization above 10 billion dollars would no longer need a qualified appraisal to substantiate the charitable deduction. Instead, they could rely on market data for pricing, much as donors do when they give publicly traded stock. This change matters for gifts of major tokens to universities, foundations and other nonprofits, where appraisal requirements have sometimes slowed or complicated donations. Another clause clarifies that passive, protocol-level staking by investment funds does not turn the fund into a trade or business, an important point for funds trying to manage their exposure to business-income rules and nexus questions. Timing and implementation also define how meaningful this framework becomes. The stablecoin safe harbor would start applying to tax years that begin after 31 December 2025. Other provisions, including the five-year deferral option and the extension of wash sale and constructive sale rules, would require detailed regulations and guidance before taxpayers can rely on them. Bipartisan House lawmakers hope that the Ways and Means Committee can refine the discussion draft, secure support across both parties, and move the bill forward before August 2026. Even with backing from the Trump administration for broad crypto tax relief, the measure still must pass the House, clear the Senate and obtain a presidential signature, so the current text should be seen as a strong signal of direction rather than a final settlement.
Conclusion
Bipartisan House lawmakers use the Digital Asset PARITY Act to push US crypto taxation toward a more structured and predictable model, without abandoning the core principles that already govern securities and other assets. Their plan combines a targeted safe harbor for stablecoin payments under 200 dollars, a five-year elective deferral for staking and mining rewards, and a set of extensions that bring wash sale, constructive sale, securities-lending, mark-to-market and charitable contribution rules into the digital asset world. By limiting the stablecoin relief to issuers approved under the GENIUS Act, demanding that qualifying tokens stay within one percent of a one-dollar peg for at least 95 percent of trading days across twelve months, and setting a clear start date after 31 December 2025, the draft tries to replace ad hoc guidance with clear, numeric benchmarks. For users, validators, funds and exchanges, the proposal maps out how tax law might treat on-chain activity over the next decade if Congress turns this discussion draft into statute. It shows that Bipartisan House lawmakers now see stablecoins as potential payment tools rather than only speculative assets, and that they are prepared to adapt existing tax doctrine instead of inventing an entirely new system for blockchains. The coming negotiations over any annual caps on the 200-dollar safe harbor, the final design of the five-year deferral election, and the scope of new rules for lending and professional trading will determine how far this framework goes. Until then, the bill stands as a detailed blueprint for a more integrated digital asset tax regime in the United States.
Disclaimer
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