House Ways and Means Committee members released a bipartisan framework Saturday that would exempt small stablecoin transactions from capital gains taxes while offering cryptocurrency stakers a five-year tax deferral option.
Representatives Max Miller (R-Ohio) and Steven Horsford (D-Nevada) unveiled the Digital Asset PARITY Act as a discussion draft addressing long-standing industry complaints about cryptocurrency tax treatment.
The proposal marks the first crypto-specific tax framework from Ways and Means members, who control federal tax policy.
Both lawmakers emphasized the need to align digital asset taxation with traditional securities rules.
What Happened
The framework exempts transactions under $200 involving "regulated, dollar-pegged" stablecoins from capital gains taxes.
The exemption would take effect for taxable years beginning after December 31, 2025.
Lawmakers specifically limited the provision to payment stablecoins, excluding other cryptocurrencies and trading activity.
The draft addresses staking and mining reward taxation through an optional five-year deferral.
Taxpayers could elect to delay taxes on staking rewards, with liability triggered after five years based on fair market value.
Rewards would then be taxed as ordinary income rather than capital gains.
This approach differs from Senator Cynthia Lummis's proposal, which defers taxation until rewards are sold.
The framework extends wash sale rules to cryptocurrencies, preventing investors from claiming losses while immediately repurchasing assets.
It also allows eligible traders to use mark-to-market accounting for reporting unrealized gains and losses annually.
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Why It Matters
Current IRS guidance taxes staking rewards as income upon receipt, creating what critics call "phantom income" before any sale occurs.
Miller said the tax code "has failed to keep pace with modern financial technology," requiring legislative clarity.
The bipartisan cooperation signals potential momentum for cryptocurrency tax reform despite partisan divides on broader digital asset regulation.
Horsford's office stated the goal is committee collaboration to "set these critical rules of the road."
The discussion draft represents an administrative compromise between immediate taxation and full deferral until disposition.
Industry advocates have pushed for years to eliminate capital gains tracking on routine stablecoin payments used like cash.
The framework remains a preliminary document mixing legislative language with policy goals, not yet introduced as a formal bill.
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