U.S. Lawmakers Introduce PARITY Act to Rewrite Crypto Tax Rules

Highlights:

• The PARITY Act would require the Treasury to study tax relief for small crypto transactions under $200.
• The proposal would delay taxes on locked staking rewards until users transfer or sell the assets.
• The bill would apply wash sale rules and stablecoin tax standards to several digital asset transactions.

A bipartisan group of U.S. lawmakers introduced the Digital Asset Protection, Accountability, Regulation, Innovation, Taxation, and Yields Act on Tuesday. Congressman Steven Horsford introduced the proposal alongside Representatives Max Miller, Suzan DelBene, and Mike Carey.

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LATEST: 🇺🇸 Bipartisan lawmakers have reintroduced the PARITY Act, directing the IRS to study whether small crypto transactions under $200 should be exempt from tax reporting requirements. pic.twitter.com/dear4F6Kar

— CoinMarketCap (@CoinMarketCap) May 21, 2026

The lawmakers introduced the PARITY Act to change how the United States taxes crypto transactions, staking rewards, and stablecoin payments. The proposal arrives as Congress debates crypto market structure, stablecoin oversight, and federal digital asset regulation.

The legislation directs the Treasury Department to study a de minimis tax exemption for small crypto transactions. However, the bill does not immediately exempt small crypto payments from taxes. Instead, Treasury must issue guidance within 180 days explaining what crypto tax relief it can provide under existing law. The proposal also orders Treasury to study how small crypto transaction taxes affect reporting obligations for investors, exchanges, and merchants.

Lawmakers also asked the Treasury to review how many crypto transactions below $200 reach the Internal Revenue Service each year. In addition, the agency must identify possible abuse risks tied to future tax exemptions. The study must explain what staff, systems, and reporting tools the IRS would need to manage a future crypto tax exemption.

Congressman Steven Horsford stated, “Right now, the lack of clear rules creates uncertainty for consumers, investors, businesses, and regulators while leaving the system game-able for wealthy and sophisticated players. Innovation should not come at the expense of accountability or fairness.”

Innovation should create opportunity for everyone, not just those already ahead.

The Digital Asset PARITY Act modernizes the tax code for the digital age, creates clearer rules, and ensures emerging financial tools help expand financial inclusion and pathways to wealth.

It is… pic.twitter.com/44B8mpEQLl

— Rep. Steven Horsford (@RepHorsford) May 19, 2026

Lawmakers added wash sale and anti-abuse provisions to stop traders from exploiting gaps in current crypto tax rules. The proposal also studies how smaller crypto transactions affect tax compliance and reporting activity across digital asset markets.

PARITY Act Expands Oversight on Stablecoins and Crypto Trading

The proposal changes tax reporting rules for stablecoins, staking rewards, lending activity, mining operations, and broker trading. The legislation outlines how crypto investors, exchanges, brokers, and payment firms would report digital asset activity under federal tax rules. Lawmakers also included several anti-abuse provisions used across traditional securities markets.

One section would treat regulated, dollar-backed stablecoins as cash in routine payment transactions. Under the proposal, users would not recognize gains or losses unless token values fall below specific redemption thresholds. Lawmakers introduced the provision to reduce tax-reporting complications associated with stablecoin payments.

The proposal also keeps legal protections for some broker-facilitated digital asset trades under existing reporting frameworks. In addition, lawmakers want wash sale and constructive sale rules applied to crypto transactions. Those rules already apply across traditional stock and securities markets.

The staking section delays taxes on blockchain validation rewards earned through locked staking arrangements. Current IRS guidance taxes staking rewards after blockchain protocols deposit the assets into user wallets. However, many users cannot immediately transfer or liquidate those locked assets.

Under the proposal, stakers could defer taxes on rewards for up to five years. The proposal would delay taxes on locked rewards until users transfer or liquidate the assets. The legislation also says investment funds conducting passive staking would not automatically face trade or business tax classification.

Washington Broadens Digital Asset Policy Debate Across Congress

The PARITY Act enters Congress as lawmakers continue to raise concerns about unresolved crypto tax issues. Earlier this month, Horsford pointed to the ongoing uncertainty involving staking rewards, crypto lending, Bitcoin donations, and transaction reporting obligations during Consensus Miami discussions.

Meanwhile, lawmakers hope to pass the CLARITY Act before July. The bill defines oversight responsibilities for crypto exchanges, token issuers, and digital asset firms. Federal lawmakers also recently advanced amendments blocking the Federal Reserve from issuing a retail central bank digital currency.

At the state level, South Carolina signed the S.163 crypto law protecting self-custody rights, staking, mining, and blockchain node operations. The South Carolina law also limits state participation in a future federal CBDC system.

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