US Lawmakers Propose Stablecoin Tax Exemption for Small Crypto Transactions

U.S. lawmakers have unveiled the Digital Asset PARITY Act, a bipartisan discussion draft that would exempt stablecoin transactions with gains or losses under $200 from capital gains tax reporting, while simultaneously closing the crypto wash-sale loophole that traders have exploited for years.

Bipartisan Bill Targets $200 Stablecoin Tax Threshold

Rep. Max Miller (R-OH) and Rep. Steven Horsford (D-NV), both members of the House Ways and Means Committee, released the Digital Asset PARITY Act as a discussion draft on December 20, 2025. The bill’s full name, the Digital Asset Protection, Accountability, Regulation, Innovation, Taxation, and Yields Act, signals its broad scope.

The headline provision creates a de minimis exemption: stablecoin transactions generating less than $200 in gains or losses would not trigger capital gains tax reporting. Only regulated payment stablecoins qualify, meaning the tokens must be issued by a GENIUS Act permitted issuer, pegged solely to the U.S. dollar, and have maintained a price within 1% of $1.00 for at least 95% of trading days in the prior 12 months.

Bitcoin and Ethereum are explicitly excluded from the exemption. Only stablecoins meeting those strict regulatory criteria would benefit, a distinction that has drawn criticism from Bitcoin advocates who view it as preferential treatment for centralized stablecoins over decentralized assets.

A Bill That Gives and Takes

Under current IRS rules, every stablecoin transaction is treated as a property disposal, triggering a taxable event. Buying coffee with USDC technically requires calculating any gain or loss against the original cost basis, even when the stablecoin is designed to hold a steady $1.00 value. For everyday payment use cases, this creates compliance friction that discourages adoption.

The stablecoin market affected by this legislation is substantial. Total stablecoin market capitalization stands at approximately $318.4 billion, with USDT at $184.1 billion and USDC at $78.1 billion accounting for over 82% of total supply.

But the bill is not purely a tax cut. It simultaneously applies wash-sale rules to digital assets, closing a loophole that has allowed crypto traders to sell at a loss for the tax deduction and immediately repurchase the same asset. Traditional securities have been subject to wash-sale restrictions for decades; crypto has not. This provision alone could generate significant new tax revenue for the IRS.

The legislation also creates an elective 5-year deferral framework for staking and mining rewards, addressing a pain point for validators who currently owe taxes on rewards at the time of receipt, even if they have not sold. Additionally, it allows mark-to-market elections for digital asset traders and dealers, and extends securities-lending tax rules to digital assets.

Rep. Miller framed the bill as overdue modernization:

“America’s tax code has failed to keep pace with modern financial technology. This bipartisan legislation brings clarity, parity, fairness, and common sense to the taxation of digital assets. It protects consumers making everyday purchases, ensures the rules are clear for innovators and investors, and strengthens compliance so everyone plays by the same rules.”

Rep. Max Miller, via official press release

Rep. Horsford echoed the sentiment, noting that “even the smallest crypto transaction can trigger tax calculation, while other areas of the law lack clarity and invite abuse.” He described the bill as taking “a targeted approach that provides an even playing field for consumers and businesses alike.”

As regulatory clarity becomes an increasing priority for the crypto industry, tools like Web3 security solutions and awareness around crypto wallet-targeting malware remain equally important for users navigating the evolving digital asset landscape.

Discussion Draft, Not Law Yet

The PARITY Act remains a discussion draft gathering stakeholder feedback. It has not been formally introduced to Congress. Rep. Miller has expressed hope the bill can advance before August 2026, but no committee hearings or markup dates have been scheduled.

A critical dependency complicates the timeline: the stablecoin exemption is contingent on the GENIUS Act framework. Stablecoins must be issued by a GENIUS Act permitted issuer to qualify for the tax relief, meaning the GENIUS Act itself would need to pass first or alongside this bill.

According to the discussion draft, an annual aggregate cap on the $200 de minimis exemption may be added to prevent the provision from sheltering large investment gains, though the final threshold has not been determined.

The bill also modernizes charitable contribution rules for digital assets, rounding out what amounts to the most comprehensive proposed overhaul of crypto tax treatment in U.S. legislative history. With the 119th Congress increasingly focused on digital asset regulation, the PARITY Act joins a growing pipeline of crypto-related legislation competing for floor time, and while market participants continue positioning around regulatory developments, passage before the August target remains uncertain.

If enacted, the provisions would apply to tax years beginning after December 31, 2025.

Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.

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