Lawmakers Introduce Bipartisan Legislation To Streamline Digital Asset Tax Framework

As crypto markets bear growl under regulatory uncertainty, U.S. legislators are taking action. Representatives Max Miller (R-OH) and Steven Horsford (D-NV) have jointly introduced the Digital Asset PARITY Act, a comprehensive proposal aimed at clarifying how the federal tax code treats digital assets, with stablecoins, staking rewards, and mining activities at the center of the reform.

Simplifying Tax Treatment for Everyday Crypto Transactions

The legislation addresses a critical pain point: routine cryptocurrency payments currently trigger capital gains reporting requirements regardless of transaction size. Under the new framework, small-value transfers would be exempt from these burdens, bringing practical relief to users who use stablecoins or other digital assets for everyday purchases. This distinction mirrors how traditional financial systems treat de minimis transactions.

The proposal also clarifies income sourcing from digital asset trading activities and extends existing securities lending tax principles to qualifying digital asset lending arrangements. By establishing parity between virtual currencies and traditional financial instruments, the framework reduces the compliance complexity that has long hindered mainstream adoption.

Addressing “Phantom Income” and Tax Deferral Flexibility

One of the most significant aspects of the Digital Asset PARITY Act involves staking and mining rewards. Currently, crypto holders face “phantom income” recognition at the moment rewards are earned, even before those assets are monetized. The legislation would allow taxpayers to defer income recognition under specified conditions, aligning tax obligations with actual cash realization.

Additionally, the bill proposes implementing wash-sale and constructive-sale rules for digital assets to prevent tax shelter abuses, while modernizing charitable deduction rules for highly liquid cryptocurrencies.

Closing the Regulatory Gap

“America’s tax code has failed to keep pace with modern financial technology,” Congressman Miller stated. “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.”

The initiative represents a broader effort to align cryptocurrency taxation with traditional financial systems, reducing ambiguity in the Internal Revenue Code and creating a more predictable environment for digital asset market participants.