A new bipartisan bill introduced by Reps. Max Miller (R-OH) and Steven Horsford (D-NV) proposes a significant overhaul of the U.S. cryptocurrency tax regime, offering relief for institutional stakers and stablecoin users while closing tax-loss harvesting loopholes favored by traders.
- A new U.S. congressional bill proposes deferring taxes on cryptocurrency staking rewards until the digital assets are officially sold.
- The legislation introduces strict compliance penalties to eliminate artificial market volume and digital asset wash trading across domestic exchanges.
- This regulatory framework provides crucial clarity for the decentralized finance sector while demanding Wall Street-level compliance from crypto platforms.
The Digital Asset PARITY Act, circulated among House committees this week, aims to align the tax code with the technical realities of digital asset usage. However, the bill presents a stark trade-off: it legitimizes staking as an industrial activity while subjecting crypto trading to the same strictures as traditional equities.
Staking as Infrastructure
Under current IRS guidance, staking rewards are often treated as income immediately upon receipt, creating “phantom income” liabilities that force validators to sell assets to cover tax bills. The proposed legislation allows taxpayers to elect a deferral period of up to five years for mining and staking rewards, or until the asset is sold. This effectively reclassifies staking yields as manufactured inventory rather than simple interest.
Industry proponents argue this change is essential for institutional adoption. As of late 2025, approximately 30% of the total Ethereum supply is staked, with over $38 billion locked in liquid staking protocols.
The Stablecoin Exemption
The bill includes a de minimis exemption for transactions under $200, meaning payments for coffee or small services would no longer trigger a capital gains report. Crucially, the text limits this exemption to assets issued by “compliant entities,” aligning with standards set in the recently proposed GENIUS Act.
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👉 Submit Your PRWhile stablecoins pegged 1:1 to the dollar rarely generate taxable gains, current law technically requires every disposal to be tracked. “Right now in the U.S., crypto has never really worked for normal daily spending… the main reason is taxes,” crypto media outlet Milk Road noted in an analysis of the bill.
By removing the reporting requirement for small transactions, the bill aims to allow stablecoins to function as actual currency rather than purely trading instruments.
miller-horsford_digital-asset-tax-bill-discussion-draftThe Trader Squeeze: Wash Sales and Hedging
In exchange for these concessions, the bill seeks to maximize revenue by closing the “wash sale” loophole. Currently, crypto investors can sell assets at a loss to offset taxes and immediately buy them back.
The new rules would apply the standard 30-day waiting period to digital assets. Furthermore, the draft introduces “constructive sale” rules. This would treat hedging positions (such as shorting a token one already holds to remain delta neutral) as a taxable sale of the underlying asset.
“This effectively taxes risk management,” warned a widely-followed on-chain tax analyst known as Crypto Tax Made Easy in a technical critique of the draft. “If you hold spot and short it to hedge, normally opening the short is non-taxable. The proposal treats the short as a taxable sale.”
Critics argue that while the stablecoin exemption offers convenience, the compliance burden for active traders and market makers will increase significantly under the new hedging rules.
Chain Street’s Take
This bill represents the maturation of crypto into a regulated asset class: boring, bureaucratic, and distinctly less profitable for the “wild west” trader. The deal is clear: Institutions get the “digital bond” treatment they need to hold staked ETH on balance sheets without tax friction.
In return, the government kills the infinite tax-loss glitch that retail traders have enjoyed for a decade. The stablecoin exemption is a nice nod to payments, but the real story is that the IRS is finally catching up to the physics of the market.
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