## Bipartisan Proposal in Congress: Simplify Cryptocurrency Tax Framework and Relax Stablecoin and Staking Taxation

U.S. lawmakers are advancing a bipartisan initiative aimed at overhauling the tax treatment of digital assets. Led by two members of Congress from Ohio and Nevada, the Digital Asset Parity Tax Act (PARITY Act) proposes several key changes designed to balance tax compliance with the practical needs of everyday crypto users.

### Tax Exemption for Stablecoin Transactions: Small Transactions Not Subject to Capital Gains Tax

The proposal recommends implementing a tax exemption for transactions involving regulated stablecoins valued below $200. These stablecoins must meet specific criteria: issued by an authorized issuer under relevant legislation, directly pegged to the US dollar, and maintaining a price within $1.00 ±1% on at least 95% of trading days over the past year.

The core aim of this measure is to reduce the tax burden for ordinary users making small crypto payments. For example, consumers purchasing goods or services with stablecoins would no longer need to calculate tiny capital gains. However, brokers and traders would be excluded from this exemption. Lawmakers are also considering setting an annual aggregate income cap to prevent the provision from being exploited to avoid taxes on large investment gains. These new rules are scheduled to take effect starting with the tax year after December 31, 2025.

### Staking and Mining Rewards: Up to Five Years of Tax Deferral Options

Currently, the IRS considers staking and mining rewards as taxable income at the time of receipt. This approach has faced criticism from many crypto advocates, who argue it is overly strict. The new proposal introduces a more flexible option: individuals can choose to defer paying taxes on rewards for up to five years, with the tax rate based on the fair market value at the end of that period.

This middle-ground approach seeks to balance between taxing at the time of receipt and taxing only upon asset sale. The reform has garnered support from crypto advocates like Senator Cynthia Lummis, who have long pushed for similar relaxed policies.

### Expand Securities Tax Rules to Digital Assets

The proposal not only focuses on specific transactions but also aims to apply existing securities tax principles to crypto assets. Key provisions include:

**Prevent "Wash Sales"** — Investors cannot artificially offset losses by quickly selling and repurchasing the same crypto assets.

**Constructive Sale Rules** — Imposing restrictions on digital assets similar to traditional securities to prevent tax-avoidance trading strategies.

**Collateral Loan Treatment** — Loans secured by liquid crypto assets as collateral would not trigger taxable events.

**Mark-to-Market Accounting** — Professional market participants can opt for mark-to-market accounting to simplify tax handling for large-scale transactions.

**Large Donation Exemption** — Crypto donations would no longer require professional valuation, reducing compliance costs for charitable giving.

**Passive Staking Agreements** — Payouts from passive staking agreements operated by investment funds acting as investment tools would not constitute trading or business activities.

These measures collectively aim to integrate digital assets into the national tax framework while maintaining mechanisms to prevent tax evasion.