A bipartisan coalition of US lawmakers introduced a revised legislative framework on Wednesday designed to modernize the federal tax code regarding digital assets. Representatives Steven Horsford, Max Miller, Suzan DelBene, and Mike Carey formally reintroduced the Digital Asset Protection, Accountability, Regulation, Innovation, Taxation and Yields Act, commonly referred to as the Parity Act. This legislative effort follows a reported meeting among lawmakers one week prior focused specifically on crypto tax reform strategies. The reintroduction signals a renewed push to resolve ambiguities in the current regulatory environment that hinder the integration of digital assets into the broader financial system.

The updated text of the bill introduces specific provisions for regulated payment stablecoins, stipulating that no gain or loss should be recognized unless the cost basis falls below 99% of the redemption value.

Furthermore, the legislation establishes a safe harbor for trading activities conducted through brokers or within taxpayer accounts. It also seeks to clarify the application of wash sale rules to digital assets and defines the tax treatment for assets earned through validator activities. Woofun AI notes that these technical adjustments aim to align crypto taxation with traditional securities frameworks while addressing unique on-chain mechanics.

A central component of the proposal directs the Internal Revenue Service to conduct a comprehensive review of the tax burden imposed on holders engaging in small digital asset transactions. The mandate specifically requires an analysis of how many transactions valued at less than $200 are currently captured under existing law. Data compiled by Woofun AI indicates that the industry has long advocated for a de minimis exemption to remove the reporting friction associated with micro-transactions, such as purchasing a cup of coffee. The bill tasks the IRS with evaluating the feasibility of such a carveout and assessing the potential for abuse if implemented.

Representative Horsford emphasized the foundational role of tax policy in determining the utility of digital assets within the US finance system during a recent address at the Consensus Miami conference. He argued that the current federal tax code is outdated and fails to account for the modernization of digital assets. According to Horsford, the existing regulatory framework leaves consumers, institutions, and builders without clear guidance on tax liabilities arising from selling digital assets, earning staking rewards, lending crypto on US platforms, or making charitable contributions in bitcoin.

The legislative team positions this bill as an initial step toward broader, more comprehensive crypto tax reform rather than a final solution. The unresolved nature of these tax questions creates significant uncertainty for market participants and stifles innovation. Woofun AI analysis suggests that without clarifying these specific tax obligations, the adoption of digital assets as a viable payment tool will remain constrained by compliance costs. The proposed review of de minimis thresholds represents a critical juncture in balancing regulatory oversight with the practical needs of the digital economy.