US Representatives Max Miller and Steven Horsford released a discussion draft bill on Thursday titled the Digital Asset Protection, Accountability, Regulation, Innovation, Taxation, and Yields Act, commonly referred to as the Digital Asset PARITY Act. The legislation aims to overhaul the Internal Revenue Code of 1986 by introducing provisions that would clarify how digital assets are taxed. The draft has not yet been formally introduced to Congress and was published to encourage debate among lawmakers, industry stakeholders, and the broader crypto community.
Under the proposed legislation, stablecoins would not be subject to capital gains taxes provided the cost basis does not fluctuate by more than 1% of one dollar, or $0.01. Additionally, transaction costs incurred when acquiring or transferring regulated dollar-pegged stablecoins cannot be counted toward an investor’s cost basis. These provisions are intended to reduce the tax burden on everyday stablecoin use.
The bill also introduces a de minimis tax exemption for stablecoin transactions valued below $200, meaning such transactions would not trigger tax liability or reporting requirements. A total annual cap on this exemption has not yet been determined. The threshold is designed to ease compliance obligations for smaller, routine transactions involving dollar-pegged digital assets.
On the question of income derived from lending, staking, or passive validator services, the draft specifies that such earnings would be treated as gross income each year. The valuation of that income would be calculated using fair market value at the time it is received. This approach brings crypto-generated passive income in line with more traditional income reporting standards.
Cody Carbone, CEO of crypto advocacy organization Digital Chamber, responded positively to the draft, stating that digital asset tax clarity is necessary for activity to fully move onshore. His comments reflect broader industry sentiment that the current lack of regulatory guidance discourages domestic crypto participation. The discussion draft is intended to serve as a starting point for that policy conversation.
However, the bill has drawn criticism from within the Bitcoin community, who note that the de minimis exemption applies only to stablecoins and not to BTC. Critics point out that similar pending legislation, including the CLARITY crypto market structure bill, also lacks a BTC de minimis tax exemption. This omission has prompted pushback from Bitcoin advocates who argue the exemption should prioritize decentralized assets.
Pierre Rochard, CEO of The Bitcoin Bond Company, a BTC financial product issuer, described the draft as moving in the wrong direction. He argued that Bitcoin, not stablecoins, should be the beneficiary of a de minimis exemption, characterizing stablecoins as centralized, permissioned instruments that amount to digital fiat rather than genuine money. His remarks highlight a growing divide within the crypto industry over which assets should receive preferential tax treatment under any forthcoming legislation.
Originally reported by CoinTelegraph.
