Bipartisan Digital Asset PARITY Act Introduced: Modernizing U.S. Crypto Tax Rules

In a rare show of cross-party cooperation, Rep. Max Miller (R-OH) and Rep. Steven Horsford (D-NV) unveiled draft legislation on December 19, 2025, aimed at bringing clarity and fairness to digital asset taxation. The Digital Asset PARITY Act seeks to align crypto tax treatment with traditional investments, offering relief for everyday users while closing potential loopholes for advanced traders.

(Sources: Bloomberg)

Official Statements from Sponsors

Rep. Max Miller stated: “America’s tax code has failed to keep pace with modern financial technology. 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.”

Rep. Steven Horsford added: “Like any emerging technology, cryptocurrencies need guardrails that allow innovation to grow while protecting taxpayers and the integrity of our tax system. Today, even the smallest crypto transaction can trigger tax calculation, while other areas of the law lack clarity and invite abuse. Our discussion draft takes a targeted approach that provides an even playing field for consumers and businesses alike.”

The bill grants targeted authority to the Treasury to prevent abuse while easing unnecessary burdens on taxpayers.

Major Provisions of the PARITY Act

The draft addresses key pain points in current IRS guidance:

• Regulated Payment Stablecoins: Establishes sensible tax treatment and exempts everyday transactions from unnecessary reporting. A proposed de minimis safe harbor would exempt capital gains on stablecoin transactions under $200 (effective after December 31, 2025).
• Staking and Mining Rewards: Introduces an elective framework treating rewards as income upon receipt but allowing a five-year deferral option until sale or disposition, addressing liquidity and “phantom income” issues.
• Digital Asset Lending: Extends existing securities-lending rules to qualifying crypto loans (fungible and liquid tokens), treating bona fide lending as non-taxable. Excludes NFTs and illiquid assets.
• Source-of-Income Clarity: Provides certainty for U.S. and foreign traders while upholding strong enforcement.
• Wash Sale and Constructive Sale Rules: Applies these to digital assets, preventing artificial loss harvesting or gain deferral through quick repurchases or offsetting positions.
• Mark-to-Market Election: Allows professional traders and dealers to opt for annual fair-value accounting, mirroring traditional financial markets.
• Charitable Contributions: Modernizes rules by waiving qualified appraisals for donations of highly liquid digital assets (market cap >$10B) while maintaining safeguards against abuse of speculative or illiquid tokens.
• Passive Staking by Funds: Clarifies that protocol-level staking does not constitute a trade or business.

Why the PARITY Act Represents Balanced Progress

Current rules tax staking and mining rewards as ordinary income immediately, often leading to double taxation concerns and complex reporting for retail holders. The bill provides meaningful relief—such as stablecoin exemptions and reward deferral—while extending anti-abuse measures like wash sales to maintain equity with securities markets.

• Retail-Friendly: Reduces friction for payments and long-term holding.
• Pro-Innovation: Clearer rules for lending, trading, and charitable giving.
• Anti-Abuse Focus: Closes loopholes exploited by sophisticated participants.
• Timeline: Provisions could take effect as early as 2026 if advanced through committee.

The legislation complements other efforts like the GENIUS Act for stablecoins and responds to ongoing IRS controversies around staking guidance.

Broader Implications for U.S. Crypto Policy

Introduced amid post-2024 election bipartisan momentum, the PARITY Act signals growing congressional willingness to establish “rules of the road” for digital assets. By treating crypto with parity to traditional finance, it aims to boost adoption, enhance global competitiveness (versus frameworks like EU’s MiCA), and reduce compliance headaches without eliminating oversight.

Stakeholders will watch committee markup and feedback closely, with Rep. Miller targeting progress before August 2026.

In essence, the bipartisan Digital Asset PARITY Act offers a pragmatic path forward: targeted relief for everyday users, professional tools for active participants, and stronger enforcement to protect market integrity.