Congress re-introduced the PARITY Act to overhaul crypto taxation. Here's what stakers, miners, traders, and stablecoin users need to know about the biggest changes.
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Two days ago, CoinDesk reported that US lawmakers took "another swing at crypto tax policy" with a revised version of the PARITY Act. The bipartisan bill, re-released March 26 by Representatives Max Miller (R-Ohio) and Steven Horsford (D-Nevada), would close the crypto wash sale loophole, create stablecoin payment exemptions, and let stakers defer taxes for up to five years. But Bitcoin miners are left out, and the industry is divided.
The Digital Asset Protection, Accountability, Regulation, Innovation, Taxation, and Yields (PARITY) Act is a bipartisan discussion draft first circulated in December 2025. The revised version released on March 26, 2026, addresses four major areas of crypto taxation that have frustrated investors, developers, and compliance teams for years.
If enacted, most provisions would apply starting with the 2026 tax year.
The single most impactful provision: applying wash sale rules to digital assets. Today, crypto traders can sell Bitcoin at a loss on Monday, buy it back on Tuesday, and still claim the full capital loss on their taxes. This loophole exists because the IRS classifies crypto as property, not securities.
Under the PARITY Act, traders would need to wait 30 days before repurchasing the same asset to claim a loss, matching the rules that stock and bond investors already follow. The IRS has already built the infrastructure for enforcement: the new Form 1099-DA includes a "Wash Sales Loss Disallowed" field.
For active traders, this eliminates a popular tax optimization strategy. For the IRS, it closes what many view as an unfair advantage crypto has over traditional markets.
The December 2025 draft proposed a flat $200 de minimis exemption for stablecoin payments. The March 2026 revision took a different approach: gains are ignored if the taxpayer's cost basis falls below 99% of the stablecoin's redemption value.
In practical terms, buying coffee with USDC no longer triggers a capital gains calculation, as long as the stablecoin held close to its peg. Only "regulated payment stablecoins" qualify: dollar-pegged, actively traded, and federally regulated.
The de minimis exemption applies only to regulated stablecoins, not Bitcoin or other cryptocurrencies. Buying a sandwich with BTC still requires a capital gains calculation.
The "phantom income" problem has plagued validators since staking went mainstream. Currently, the IRS requires staking rewards to be taxed as ordinary income the moment you receive them, even if you cannot readily sell the tokens.
The PARITY Act creates an elective framework: stakers can defer taxes on rewards for up to five years or until they sell, whichever comes first. By shifting the taxable event from receipt to disposition, this removes a significant liquidity burden on US-based staking operations.
Professional crypto traders and dealers would gain the option to elect Section 475 mark-to-market accounting. This means recognizing gain or loss on publicly traded digital assets based on fair market value at year-end, with all gains treated as ordinary income.
This aligns crypto trading with how securities dealers are already taxed and simplifies year-end accounting for high-volume traders.
The most heated debate centers on what the PARITY Act leaves out. While stakers get five-year deferral, Bitcoin miners receive no equivalent relief.
The Bitcoin Policy Institute (BPI) has been vocal in opposition. As BPI Managing Director Conner Brown told BeInCrypto: the draft "retains double taxation on Bitcoin mining while providing targeted relief to staking operations."
BPI's full critique goes further. The institute argues that the $200 de minimis exemption for stablecoin payments excludes Bitcoin, "which alone represents 60% of the market cap of all digital assets. This means that a person who buys a cup of coffee with bitcoin still faces a capital gains calculation."
On the other side, The Digital Chamber CEO Cody Carbone welcomed the draft as "a bipartisan digital asset tax discussion draft," while cautioning that significant revisions are needed "or activity will never fully onshore."
The divide reflects a deeper tension in crypto policy: should legislation be technology-neutral, treating proof-of-work and proof-of-stake identically, or should it optimize for specific use cases?
The PARITY Act would position the US in a middle ground between tax-free jurisdictions and high-tax regimes.
| Country | Crypto Capital Gains | Staking Tax | De Minimis |
|---|---|---|---|
| US (current) | Up to 37% short-term | Taxed at receipt | None |
| US (PARITY Act) | Up to 37% + wash sales | 5-year deferral | Stablecoins only |
| EU (MiCA/DAC8) | Varies by country | Varies | Varies |
| UK | CGT above £3,000 | Taxed as income | £3,000 allowance |
| Singapore | 0% (individuals) | Business = 22% | No CGT |
| UAE |
The EU launched its Crypto-Asset Reporting Framework (CARF) on January 1, 2026, requiring platforms to collect detailed user data with the first cross-border automatic exchange happening September 30, 2027. Singapore and the UAE begin similar reporting in 2027-2028.
While Congress debates the PARITY Act, new IRS rules are already in effect.
Starting January 1, 2025, brokers must file Form 1099-DA reporting gross proceeds from digital asset sales. For 2026 transactions (filed in 2027), brokers must also report adjusted cost basis for "covered" assets, those acquired and held in the same brokerage account.
Custodial exchanges, hosted wallet providers, and digital asset kiosks all fall under reporting requirements. Decentralized platforms that never take custody of user funds remain exempt from 1099-DA obligations, though taxpayers still owe taxes on DeFi activity.
The PARITY Act remains a discussion draft. Representatives Miller and Horsford plan to introduce it as a formal bill this spring, with Miller stating he believes the broader legislation can advance before the August 2026 recess.
Two paths could accelerate passage. The first is standalone legislation, similar to how the CLARITY Act passed the House in July 2025 before stalling in the Senate. The second is attachment to a larger reconciliation bill, which Sullivan & Cromwell notes has become more likely as funding showdowns continue.
Either way, significant revisions are expected. The mining community's opposition, the stablecoin scope questions, and the need for Treasury and IRS implementing regulations all add complexity.
For crypto investors, the practical takeaway is this: the wash sale loophole likely has a limited shelf life. Regardless of the PARITY Act's timeline, the IRS infrastructure to enforce wash sale rules on crypto is already built into Form 1099-DA. Using 2026 as a final year for aggressive tax-loss harvesting without wash sale restrictions may be prudent, but consult a qualified tax professional before making strategy changes.
Disclaimer: This article is for informational purposes only and does not constitute financial or tax advice. Tax laws are complex and subject to change. Always consult with a qualified tax professional before making decisions based on pending legislation.
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