US Lawmakers Drop Crypto Tax Proposal—Is Bitcoin Finally Losing Its Exemption?

Ever wonder if Uncle Sam’s IRS agents are secretly crypto geeks trying to decode your digital wallet? Well, US Representatives Max Miller and Steven Horsford just threw a wrench — or maybe a shiny new coin — into the tax code machine with their “Digital Asset PARITY Act.” This bold, intriguingly named draft bill aims to slice through the fog of IRS confusion by redefining how digital assets, especially those elusive stablecoins, get taxed. Picture this: stablecoins that dodge capital gains unless your cost basis wiggles more than a penny, and a nifty little de minimis tax exemption for stablecoin transactions under $200. But here’s the kicker — Bitcoin fans aren’t exactly popping champagne, arguing that this bill snubs Bitcoin while cozying up with stablecoins, those “just fiat” digital doppelgängers. It’s a fascinating tug-of-war between innovation, regulation, and good old tax policy drama. Ready to dive deeper into the future of crypto taxes and the debates cooking in Congress? LEARN MORE.

US Representatives Max Miller and Steven Horsford published a discussion draft bill on Thursday titled the ‘‘Digital Asset Protection, Accountability, Regulation, Innovation, Taxation, and Yields Act’’ or the ‘‘Digital Asset PARITY Act,” to overhaul the tax code for digital assets.

The Digital Asset PARITY Act seeks to overhaul the Internal Revenue Code of 1986 by adding provisions that would clarify the tax treatment of digital assets.

The legislation said that stablecoins are not subject to gains if the cost basis, or the amount paid by the investor, does not fluctuate by more than 1% of $1 or $0.01, according to the discussion draft.

Transaction costs incurred to acquire or move regulated dollar-pegged stablecoins cannot be counted toward an investor’s cost basis, according to the bill.

Taxes, US Government, United States, Tax reduction — *The Digital Asset PARITY Act. Source:* *Digital Chamber*

The bill also introduces a de minimis tax exemption for stablecoin transactions below $200, meaning that stablecoin transactions below the $200 threshold do not trigger tax or reporting requirements. A total annual exemption cap is yet to be determined.

Income from lending, staking or income earned through “passive” validator services is treated as part of the recipient’s gross income every year, and calculated using “fair market” value, the draft said.

The Digital Asset PARITY Act has not yet been introduced to Congress; it was published as a discussion draft to open up debate between lawmakers, stakeholders and the crypto industry about how to overhaul crypto tax policy in the US.

Crypto tax proposal highlights schism in the crypto industry

“We need digital asset tax clarity or activity will never fully onshore,” Cody Carbone, the CEO of crypto advocacy organization Digital Chamber, said in response to the discussion draft.

However, Bitcoiners noted that the bill includes only a de minimis tax exemption for stablecoins, not Bitcoin (BTC), similar to pending legislation, including the CLARITY crypto market structure bill, which also lacks a BTC de minimis tax exemption.

“This is the wrong direction to go in,” Pierre Rochard, CEO of The Bitcoin Bond Company, a BTC financial product issuer, said about the draft.

“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,” he added.

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