New House Bill Targets Crypto Wash Sales, Offers Stablecoin Relief
Reps. Miller and Horsford unveil a bipartisan tax draft swapping a $200 stablecoin exemption for stricter wash sale rules.
The Receipt: A Trade-Off for Legitimacy
Reps. Max Miller (R-Ohio) and Steven Horsford (D-Nev.) released a discussion draft of the Digital Asset PARITY Act late Saturday, marking the first serious bipartisan attempt by House Ways and Means members to integrate crypto into the federal tax code. The proposal offers a stark legislative trade-off: in exchange for usable stablecoins and staking tax deferrals, the industry must accept the closure of the “wash sale” loophole, a favorite tool for tax-loss harvesting.
The Sweet: Usable Digital Cash
For the first time, U.S. tax code would recognize a de minimis exemption for crypto. The bill eliminates capital gains taxes on stablecoin transactions under $200, provided the asset is a “regulated, dollar-pegged” stablecoin. This effectively greenlights the use of assets like USDC or PYUSD for coffee-sized payments without triggering a taxable event for every swipe.
The Sour: Wash Sale Rules Arrive
The “medicine” in the bill is the extension of wash sale rules to digital assets. Currently, crypto traders can sell a token at a loss to claim a tax deduction and immediately buy it back—a strategy illegal in equities markets. The PARITY Act closes this gap, aligning crypto trading standards with traditional finance. This shift would force algorithmic traders and retail investors to fundamentally restructure their year-end tax strategies.
Staking Relief: The 5-Year Option
Addressing the “phantom income” problem, the draft proposes an optional 5-year tax deferral for mining and staking rewards. Instead of being taxed on receipt (as per current IRS guidance). Stakers could delay recognition until the asset is sold or five years pass. At that point, rewards would be taxed as ordinary income based on fair market value.
The draft legislation describes this as “a necessary compromise between immediate taxation upon dominion & control, and full deferral until disposition.”
Institutional Context
While only a discussion draft, this document signals the “adulting” phase of U.S. crypto policy. By moving digital assets from an edge case to a codified asset class with specific exemptions (and restrictions), lawmakers are laying the groundwork for institutional integration. The inclusion of mark-to-market accounting for professional traders further supports this thesis, potentially simplifying books for crypto-native hedge funds.
