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." The legislation aims to overhaul the Internal Revenue Code of 1986 by adding provisions to clarify the tax treatment of digital assets.
The proposal introduces specific rules for stablecoins. It states that stablecoins would not be subject to capital gains tax if their value does not fluctuate by more than 1% of $1 (or $0.01). Furthermore, transaction costs incurred to acquire or move regulated dollar-pegged stablecoins cannot be counted toward an investor's cost basis.
A key feature is a de minimis tax exemption for stablecoin transactions below $200. Transactions under this threshold would not trigger tax or reporting requirements, although a total annual exemption cap has not yet been determined. The bill treats income from lending, staking, or "passive" validator services as part of the recipient's gross income annually, calculated using "fair market" value.
It is crucial to note that the Digital Asset PARITY Act has not yet been formally introduced to Congress. It was published as a discussion draft to open debate between lawmakers, stakeholders, and the crypto industry on overhauling US crypto tax policy.
The proposal has highlighted a schism within the crypto industry, particularly regarding which assets should benefit from tax exemptions. While the bill includes a de minimis exemption for stablecoins, it notably does not extend similar treatment to Bitcoin (BTC). This mirrors other pending legislation, such as the CLARITY crypto market structure bill.
Cody Carbone, CEO of the crypto advocacy organization Digital Chamber, stated, "We need digital asset tax clarity or activity will never fully onshore." However, Bitcoin advocates have criticized the approach. Pierre Rochard, CEO of The Bitcoin Bond Company, argued, "This is the wrong direction to go in. 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."
