U.S. Lawmakers Rework Crypto Taxation in PARITY Act

U.S. lawmakers are taking another shot at crypto tax reform, with a revised version of the PARITY Act, the Digital Asset Protection, Accountability, Regulation, Innovation, Taxation and Yields Act, re-entering congressional discussion after an updated draft was circulated on March 26.

The bill is co-sponsored by Representatives Steven Horsford (D-Nev.) and Max Miller (R-Ohio), a bipartisan pairing that signals how much crypto tax reform has shed its partisan edge.  Major federal tax legislation is expected to dominate congressional attention in the months ahead, and the sponsors appear to be positioning the PARITY Act to either attach to that momentum or shape the terms of debate before reconciliation talks solidify.

How the De Minimis Approach Changed in the March Revision

The bill first appeared as a discussion draft in December before being reissued with meaningful revisions. The most consequential change involves de minimis exemptions, the thresholds below which small transactions wouldn’t trigger capital gains reporting. 

This has been a longstanding grievance from the crypto industry, which has argued that the current framework makes routine use of digital assets impractical. Under existing IRS rules, paying for anything with Bitcoin is technically a taxable event requiring the buyer to calculate gain or loss on the transaction.

The original draft proposed a $200 exemption threshold but scoped it narrowly to “regulated payment stablecoins” and tied it to provisions of the GENIUS Act, leaving Bitcoin and most other assets outside its reach.  The March revision abandons that structure entirely. 

Rather than a fixed dollar cap, the updated draft introduces a rule under which no gain or loss is recognized on the sale of a regulated payment stablecoin, provided the taxpayer’s cost basis isn’t below 99% of the redemption value. Exchanges are treated separately from sales, with a deemed basis of $1 applied in those cases. It’s a technically more precise approach, though whether it meaningfully improves things for ordinary holders is a separate question.

Draft Extends Wash Sale Rules to Crypto and Clarifies Staking Taxes

The draft extends wash sale rules to digital assets for the first time. In traditional securities markets, wash sale restrictions block investors from claiming a tax loss on an asset repurchased within 30 days. This mechanism is designed to prevent taxpayers from manufacturing paper losses while maintaining economic exposure. 

Crypto has operated outside that framework, enabling widespread tax-loss harvesting: selling at a loss for the tax benefit, then immediately re-entering the position. Closing that gap has broad legislative support and mirrors provisions Senator Cynthia Lummis (R-Wyo.) included in earlier tax legislation.

The draft also draws a regulatory distinction between passive staking and active trading, treating the two differently for tax purposes.  The acknowledgment is implicit but significant: the existing framework, which lumps all crypto activity together, fits none of it particularly well.

Tax Bill Politics Will Decide Whether PARITY Moves

Whether any of this reaches enactment is an open question. The PARITY Act’s fate is bound up with the broader trajectory of tax negotiations in Washington, specifically, whether reconciliation legislation advances and whether digital asset provisions survive the cut. 

President Trump has outlined fiscal year 2027 budget priorities, but the distance between stated priorities and enacted legislation runs through a Congress with a congested agenda and a track record of letting crypto-specific provisions stall between agreement on principles and the harder work of legislative text.

Industry participants and policy advocates are pushing harder on transaction-level reporting burdens and activity classification than in previous cycles, partly because the regulatory environment has moved far enough that the debate is no longer about whether digital assets deserve a coherent tax framework, but what that framework should actually contain. The PARITY Act is one answer to that question. Whether Congress agrees, and on what timeline, remains to be seen.