A bipartisan group of lawmakers in the U.S. House of Representatives has introduced a draft proposal aimed at modernizing the taxation of cryptocurrencies. The plan known as the Digital Asset PARITY Act seeks to create a limited tax harbor for stablecoin transactions and clarify how staking rewards are taxed. The initiative reflects growing recognition that current tax rules for digital assets are complex and burdensome for many investors and users.
Under the proposal stablecoin transactions involving regulated dollar pegged coins used for payments and valued under two hundred dollars would be exempt from capital gains tax. This measure is intended to simplify reporting for routine transactions and reduce compliance challenges. To qualify the stablecoins would need to meet specific issuer and price stability requirements.
The draft legislation also addresses the taxation of staking and mining rewards. Current rules require taxpayers to report staking rewards as ordinary income when received even if the tokens are not sold which can create phantom income. The new framework would allow deferral of taxes on staking and mining rewards for up to five years with taxes based on the fair market value at the time of reporting.
Additional provisions would apply securities related tax rules such as wash sale restrictions to digital assets and allow eligible investors to elect mark to market accounting for their crypto holdings. The safe harbor and staking measures are designed to take effect for taxable years beginning after December 31 2025 and represent a step toward clearer rules for cryptocurrency users.
0 Comments