by Vincent Muthee
Two US House legislators have filed a draft proposal to reform the taxation of digital assets. The proposal targets stablecoins and staking rewards, which according to lawmakers, the existing taxation regulations do not cover explicitly.
The framework comes from members of the House Ways and Means Committee, the chamber that controls tax policy. It marks the first time committee lawmakers have formally outlined how cryptocurrencies could fit into existing tax laws.
Stablecoin Exemption Aims to Ease Small Payments
Republican Representative Max Miller of Ohio and Democratic Representative Steven Horsford of Nevada introduced the discussion draft under the Digital Asset PARITY Act banner. The framework proposes a capital gains tax exemption for regulated, dollar-pegged stablecoin transactions below $200.
Alongside @RepHorsford, I released a working draft of The Digital Asset PARITY Act, a bipartisan effort to bring clarity and parity to crypto tax policy.
This bill would protect consumers making everyday purchases, ensure the rules are clear for innovators and investors, and…
— Congressman Max Miller (@RepMaxMiller) December 20, 2025
In the proposed bill, US lawmakers target routine consumer payments, not trading activity. Under the existing regulations, users have to keep records of gains or losses on all purchases of crypto, even those of a small nominal value. The bill, however, restricts relief to stablecoins, which is aimed at not expanding the exemption to volatile resources such as Bitcoin or Ether.
The exemption is also only applicable to coins that fall under the GENIUS Act framework. Eligible stablecoins must track the US dollar exclusively and hold their value within 1% of $1 for at least 95% of trading days over the past year. Also, brokers and dealers cannot use the exemption.
Lawmakers Seek a Balance on Staking and Mining Taxes
The draft also addresses how staking and mining rewards should be taxed. IRS guidance issued during the Biden administration requires taxpayers to report rewards as income once received, regardless of sale.
Republicans have challenged that rule, arguing it taxes unrealized value. Some Democrats defend the policy, saying rewards resemble earned income. Miller and Horsford proposed a compromise that gives taxpayers flexibility.
The proposed bill provides taxpayers with a five-year opportunity to defer staking and mining reward tax. Subsequently, such rewards would be taxed as ordinary income with their fair market value at that time.
This approach sits between immediate taxation and full deferral until sale. Senator Cynthia Lummis has backed the latter option, which crypto firms favor. The House bill further explains that the passive staking of investment funds at the protocol level is not considered a trade or business.
Applying Securities Rules on Digital Assets
Miller’s and Horsford’s proposal ushers cryptocurrencies into conventional securities taxation, in addition to the stablecoins and staking relief. It imposes wash sale regulations on digital assets, circumventing strategies that entrap losses by making fast buys.
The proposal also offers constructive sale provisions, which focus on those transactions that gain profits but do not subject the individual to taxation. Crypto lending is treated in the same manner as securities lending as long as the assets are fungible and liquid. But NFTs and illiquid tokens do not receive the benefit of the draft.
Professional traders may choose mark-to-market accounting. This method permits the recognition of the gain and losses unrealized annually. This option enables traders to offset crypto losses against wage income. The bill also waives appraisal requirements for charitable donations of large-cap digital assets.
The stablecoin provision would take effect for tax years starting after December 31, 2025. Miller said he expects the broader framework to advance before August 2026. For now, the draft signals a rare bipartisan push to define clear tax rules for crypto markets.
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