US lawmakers draft PARITY bill! Stablecoin transactions exceeding $200 per transaction are tax-exempt

A bipartisan proposal in the United States sets a tax-free safe harbor for stablecoin payments, allowing staking and mining rewards to be taxed five years later, and strengthens wash sale rules, covering daily transactions below $200.

The US cryptocurrency tax system is expected to undergo significant adjustments. Recently, two bipartisan House members jointly introduced a tax reform bill called the “Digital Asset PARITY Act,” aiming to establish a “tax-free safe harbor” for stablecoin payments used in daily transactions and to present a compromise on “when staking rewards should be taxed.”

The “Digital Asset PARITY Act” was jointly proposed by Republican Ohio Congressman Max Miller and Democratic Nevada Congressman Steven Horsford, both members of the House Ways and Means Committee.

Stablecoin “Safe Harbor”: Transactions Under $200 Exempt from Capital Gains Tax

For a long time, using cryptocurrencies in the US for daily purchases like coffee has been considered a “disposition of property,” meaning every small transaction could trigger capital gains tax, which has been a major obstacle for cryptocurrencies entering the payments space.

The “Digital Asset PARITY Act” proposes that any payment made with a regulated, USD 1:1 pegged stablecoin, with a single transaction amount under $200, will be exempt from capital gains tax.

This design mainly targets “payment purposes,” not investment activities. The bill also explicitly states that the tax-free safe harbor does not apply to other cryptocurrencies like Bitcoin and Ethereum, nor to brokers and traders.

To qualify for the safe harbor, stablecoins must be issued by institutions authorized under the “GENIUS Act,” be pegged solely to the US dollar, and have maintained price stability within 1% of $1 on at least 95% of trading days over the past 12 months.

The bill notes that lawmakers are still evaluating whether to set an annual transaction cap to prevent abuse of this design for tax evasion.

Staking and Mining Rewards Can Be Deferred 5 Years for Reporting

The most attention-grabbing aspect of the “Digital Asset PARITY Act” is the timing of taxation for “mining and staking rewards.” This has long been a politically and practically contentious issue in US cryptocurrency tax policy.

According to guidance reaffirmed by the IRS during the Biden administration, mining and staking rewards are taxed as income at the moment of receipt, often leading investors to pay large taxes before they even have the funds in hand, which has faced industry opposition for years.

In response, the “Digital Asset PARITY Act” offers a compromise, allowing taxpayers to delay reporting for five years, after which they can include the fair market value at that time as ordinary income.

While providing a grace period on the payment side, the bill also aims to strengthen anti-tax-avoidance measures on the transaction level, similar to traditional finance:

1. Prohibiting “Wash Sales”: Like stocks, crypto investors cannot use “short-term losses from buying and selling to artificially increase costs and offset profits” for tax avoidance;
2. Presumption of Sale Rules: To prevent strategies that lock in gains but deliberately delay tax payments;
3. Extending securities lending rules to cryptocurrencies: For liquid, homogeneous digital assets, lending itself does not constitute a taxable event.

Additionally, professional traders may choose to use a “mark-to-market” accounting method; for crypto assets with a market value exceeding $10 billion, donations to charitable organizations can be exempt from valuation requirements.

The “Digital Asset PARITY Act” also clarifies that “passive, protocol-level staking” conducted by investment funds should not be considered a trade or business activity, avoiding additional tax burdens.

According to the bill, the stablecoin tax-free safe harbor will apply to tax years after December 31, 2025. Max Miller expects the overall bill to potentially pass before August 2026.

• This article is reprinted with permission from: “BlockCast”
• Original title: “US House Members Draft New Bill! Aiming for ‘Stablecoin Transactions Under $200’ Tax Exemption”
• Original author: Block Sister MEL