- Lawmakers propose a safe harbor for stablecoin payments under two hundred dollars to reduce tax burden.
- Taxpayers could defer staking rewards for five years before paying ordinary income taxes.
- New rules extend wash sale and constructive sale principles to digital asset trading.
Two bipartisan House lawmakers have released a new draft tax framework that targets long standing digital asset tax uncertainty. The proposal centers on stablecoin payments, staking rewards, and enforcement gaps. Lawmakers aim to reduce friction for small users while tightening oversight for traders.
The framework is called the Digital Asset PARITY Act. Members of the House Ways and Means Committee released the discussion draft. The bill reflects cross party coordination. It focuses on practical compliance issues rather than market expansion.
Stablecoin Payments Gain Limited Tax Clarity
The draft introduces a narrow safe harbor for stablecoin transactions. Regulated dollar pegged stablecoin payments below $200 would avoid capital gains taxes. The rule focuses on daily consumer activity. It does not apply to investment activity.
Only specific stablecoins would qualify. Issuers must meet standards under the GENIUS Act. Tokens must remain fully backed by the U.S. dollar. Price stability must stay within one percent for most trading days. The measurement period spans the previous twelve months.
The proposal excludes brokers and dealers from the exemption. It also excludes other cryptocurrencies. Lawmakers continue to study an annual transaction cap. The intent is to avoid sheltering trading profits. As a result the relief remains tightly scoped.
Staking And Mining Rewards Face A New Timing Rule
The draft also addresses taxation of staking and mining rewards. This issue has remained unresolved for years. Current IRS guidance taxes rewards upon receipt. Other proposals favored taxation only after sale.
The new framework introduces an optional deferral approach. Taxpayers could delay taxes on rewards for up to five years. After that window taxes would apply as ordinary income. Valuation would rely on fair market value at that time.
This model limits immediate tax pressure. It also avoids unlimited deferral. The option applies only by election. Taxpayers retain flexibility under the proposal.
Securities Tax Rules Extend To Crypto Markets
The draft applies wash sale rules to digital assets. Investors could no longer claim losses through rapid repurchases. This change mirrors stock market regulations. It targets tax driven trading behavior.
Constructive sale rules would also extend to cryptocurrencies. These rules prevent strategies that lock in gains without triggering taxes. As a result crypto trading would align more closely with securities treatment.
The proposal also addresses digital asset lending. It extends securities lending tax principles to qualifying crypto loans. Fungible and liquid assets would qualify. These loans would remain non taxable events. Illiquid assets and non fungible tokens would not qualify.
Additional Provisions Affect Funds And Charities
Professional traders could elect marks to market accounting. This option allows year end valuation of holdings. It aligns crypto trading with traditional financial practices.
Charitable contributions also receive clarification. Digital assets with market capitalizations above ten billion dollars would not require qualified appraisals. This change reduces administrative burdens for donors and nonprofits.
The draft further clarifies fund level activity. Passive protocol level staking by investment funds would not count as a trade or business. This distinction affects reporting obligations and tax treatment. The stablecoin exemption would apply to taxable years beginning after December 31, 2025. Lawmakers expect committee review to continue through 2026.
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