Bipartisan Draft Clarifies Crypto Tax Rules for Stablecoins, Staking

U.S. Representatives Max Miller of Ohio and Steven Horsford of Nevada released a discussion draft on March 27 aimed at clarifying the federal tax treatment of digital assets, focusing on exemptions for stablecoins and rules for income from staking and lending activities.

The proposal, known as the Digital Asset PARITY Act, would amend the Internal Revenue Code of 1986 to address longstanding uncertainties in how cryptocurrencies and similar assets are taxed. Key provisions target stablecoins pegged to the U.S. dollar, exempting them from capital gains recognition if their value remains stable within one percent or one cent of the acquisition cost. Transaction fees for buying or transferring regulated dollar-pegged stablecoins would also be excluded from an investor's cost basis, avoiding artificial increases in taxable gains.

A de minimis exemption would apply to small stablecoin transactions under $200, eliminating tax and reporting requirements for those amounts, though lawmakers have not yet set an annual cap. For income generated through lending, staking or passive validator services, the draft specifies treatment as ordinary gross income in the year it is received, valued...