A bipartisan group of U.S. lawmakers has introduced new legislation aimed at modernizing the country’s digital asset tax framework as policymakers continue expanding efforts to regulate the crypto sector. The proposed Digital Asset Protection, Accountability, Regulation, Innovation, Taxation, and Yields (PARITY) Act was introduced by Congressman Steven Horsford alongside Representatives Max Miller, Suzan DelBene, and Mike Carey.
According to lawmakers, the legislation is designed to address outdated and inconsistent tax rules surrounding cryptocurrencies while creating clearer standards for investors, businesses, and regulators. The framework also represents a concerted effort to eliminate administrative tax traps for retail users while simultaneously closing compliance loopholes exploited by sophisticated traders.
Bill targets stablecoins, staking, and crypto lending
The legislation introduces several proposed changes covering stablecoins, staking rewards, lending activity, mining operations, and professional crypto trading.
Under the proposal, regulated dollar-backed stablecoins used for routine payments could receive tax treatment similar to cash transactions, reducing compliance complexity for everyday users and merchants.
In addition, lawmakers proposed extending anti-abuse measures commonly used in traditional securities markets, including wash-sale and constructive sale rules, to certain digital asset activities. The legislation also clarifies that passive protocol-level staking by investment funds would not automatically qualify as a trade or business under the tax code.
One of the most consequential changes outlined in the PARITY Act addresses how onchain validation rewards are processed. Under current IRS interpretations, staking rewards are frequently taxed the moment they are credited to a wallet address, regardless of whether those tokens are locked in a protocol or liquid enough to cover the tax bill. The PARITY Act resolves this by allowing stakers to elect to defer asset taxation for up to five years. The “phantom income” would only be recognized as ordinary income at fair market value when the rewards are liquidated or transferred.
Horsford says existing rules are outdated
While introducing the legislation, Congressman Horsford said the current tax framework has failed to keep pace with the rapid growth of digital assets and blockchain-based finance. “As digital assets continue to grow and evolve, Washington cannot afford to stay stuck in the past,” Rep. Horsford said.
He added that the lack of clear rules has created uncertainty for investors, businesses, consumers, and regulators while leaving room for market abuse and inconsistent treatment.
According to Horsford, the PARITY Act is intended to establish “clear, durable, and administrable standards” while balancing innovation with accountability and investor protections.
Congressman Miller also said the proposal is aimed at modernizing outdated tax policies while helping maintain U.S. competitiveness in the global digital economy.
Earlier warnings over crypto tax uncertainty
The legislation also follows earlier remarks made by Horsford during Consensus Miami earlier this month, where he warned unresolved crypto tax issues could weaken broader U.S. digital asset policy efforts.
At the event, Horsford highlighted ongoing uncertainty surrounding staking rewards, crypto lending, Bitcoin donations, and transaction reporting obligations, arguing that unresolved tax treatment continues to create operational and compliance challenges across the industry.
He described the PARITY Act as a foundational step toward broader crypto regulatory clarity as debate around market structure legislation, including the CLARITY Act, continues in Washington.
US crypto policy debate continues to expand
The proposal arrives as U.S. lawmakers and regulators continue debating stablecoins, tokenization, crypto ETFs, and central bank digital currencies (CBDCs).
Earlier this week, lawmakers in Washington advanced efforts to permanently prohibit the Federal Reserve from issuing a retail CBDC through amendments tied to a housing bill.
At the state level, South Carolina recently signed the S.163 crypto law protecting self-custody rights, staking, mining, and blockchain node operations while restricting participation in a federal CBDC framework.
Meanwhile, Wall Street firms and crypto industry leaders have also continued pressing the U.S. Securities and Exchange Commission for clearer rules governing tokenized assets, stablecoins, and institutional crypto infrastructure.
Also read: Fed Payment Account Plan Could Open Settlement Rails to Crypto Firms
