What Does the Digital Asset PARITY Act Propose?
US Representatives Max Miller and Steven Horsford have released a discussion draft of the “Digital Asset Protection, Accountability, Regulation, Innovation, Taxation, and Yields Act,” or the “Digital Asset PARITY Act,” outlining a proposed overhaul of how digital assets are taxed under US law.
The bill seeks to amend the Internal Revenue Code of 1986 by introducing clearer definitions and treatment for digital assets, with a particular focus on stablecoins. It remains a discussion draft and has not yet been formally introduced to Congress, signaling an early-stage effort to gather feedback from lawmakers, regulators, and industry participants.
The proposal reflects ongoing attempts to align tax policy with the growing role of digital assets in payments, trading, and financial infrastructure.
How Would Stablecoins Be Taxed Under the Proposal?
The draft introduces targeted provisions for dollar-pegged stablecoins. It states that stablecoins would not be subject to capital gains tax if their value does not fluctuate by more than 1% of $1, effectively treating them as low-volatility transactional instruments rather than speculative assets.
The legislation also specifies that transaction costs associated with acquiring or transferring regulated stablecoins cannot be included in an investor’s cost basis. This distinction separates stablecoin usage from traditional asset accounting, where such costs are typically factored into gains or losses.
A de minimis exemption is also included. Transactions below $200 would not trigger tax liabilities or reporting requirements, although an annual cap on such exemptions has not yet been defined.
Investor Takeaway
How Does the Bill Address Income From Crypto Activities?
The proposal extends beyond payments to cover income generated from digital asset activities such as lending, staking, and validator services. Under the draft, such income would be included in the recipient’s gross income and assessed annually based on fair market value.
This approach reinforces the classification of yield-generating crypto activities as taxable income streams, aligning them more closely with traditional financial products. It also introduces a consistent framework for reporting returns from decentralized finance and network participation.
At the same time, the absence of broader exemptions suggests that the bill prioritizes clarity over tax relief in areas tied to investment and yield generation.
Investor Takeaway
Why Is the Proposal Dividing the Crypto Industry?
The draft has exposed divisions within the crypto sector, particularly around which assets should benefit from tax exemptions. While the bill introduces a de minimis threshold for stablecoins, it does not extend similar treatment to bitcoin, a point of contention among industry participants.
“We need digital asset tax clarity or activity will never fully onshore,” said Cody Carbone, CEO of the Digital Chamber, in response to the proposal.
Critics argue that limiting exemptions to stablecoins overlooks the broader role of decentralized assets. “This is the wrong direction to go in,” said Pierre Rochard, CEO of The Bitcoin Bond Company. “It’s Bitcoin that should have a de minimis tax exemption. Stablecoins are not decentralized, and they are not permissionless. They’re not real money; they’re just fiat.”
The debate highlights a deeper split between those prioritizing payment efficiency through stablecoins and those advocating for parity with decentralized assets. As the bill remains in draft form, these disagreements are likely to shape revisions before any formal introduction.
