Congress Pushes Forward With Landmark Crypto Tax Reform—Here's What It Means for You

The U.S. Congress is making a serious move to overhaul how digital assets get taxed. Representatives Max Miller and Steven Horsford have jointly introduced the Digital Asset PARITY Act, a bipartisan proposal aimed at untangling the complicated, outdated tax rules that have been strangling the crypto industry. After years of regulatory ambiguity, this framework signals a shift toward bringing virtual currencies into alignment with how traditional financial instruments are taxed.

Stablecoins Finally Get Clear Rules

One of the biggest wins in this proposal: stablecoins are getting their own tax treatment. Dollar-pegged stablecoins would receive clearer, more practical guidance that reflects their use case as everyday payment tools rather than speculative assets. This matters because it addresses a core pain point—routine transactions won’t trigger unnecessary capital gains reporting for transfers below a specified threshold. Essentially, buying a coffee or paying for services with USDC or USDT won’t create a taxable event. That’s a game-changer for adoption.

Relief for Retail and Active Traders

The act goes further by tackling “phantom income”—a nightmare scenario for anyone holding staking or mining rewards. Currently, you get taxed on income the moment you receive rewards, even if you haven’t sold anything and have zero cash to pay the tax bill. The new framework allows deferral of income recognition under specified conditions, giving holders breathing room and eliminating the forced liquidation problem. Additionally, wash-sale and constructive-sale rules would now apply to digital assets, creating parity with stock market regulations and preventing the kind of aggressive tax-loss harvesting strategies that blur the line between legitimate planning and abuse.

Sourcing Rules and Lending Clarity

The proposal also modernizes how income from digital asset trading gets classified for tax purposes. More importantly, it extends established tax principles from securities lending to qualified digital asset lending arrangements. This legitimizes staking-as-a-service and other yield strategies by putting them on equal footing with traditional finance.

Charitable Giving Gets an Upgrade

For those looking to donate crypto to charity, the framework modernizes deduction rules for highly liquid digital assets, making philanthropic contributions more streamlined and predictable.

What This Signals

According to Congressman Miller, “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.” The broader goal is obvious: create a coherent regulatory environment where crypto operates under the same rulebook as traditional finance, eliminating the uncertainty that has held back institutional and retail adoption alike.