U.S. Reps. Max Miller and Steven Horsford on Thursday released a discussion bill titled the “Digital Asset Protection, Accountability, Regulatory, Innovation, Taxation and Profitability Act” or the “Digital Assets PARITY Act” to amend the digital asset tax code.
The Digital Asset PARITY Act seeks to amend the Internal Revenue Code of 1986 by adding provisions that clarify the tax treatment of digital assets.
As discussed, the legislation states that stablecoins are not subject to yields if the cost basis or amount paid by the investor does not fluctuate by more than 1% of $1 or $0.01. design.
Under the bill, transaction costs incurred to acquire or transfer regulated dollar-listed stablecoins cannot be included in an investor’s cost basis.
The bill also introduces a de minimis tax exemption for stablecoin transactions below $200, which means that stablecoin transactions below the $200 threshold do not trigger tax or reporting requirements. The total annual exemption limit has not yet been set.
The bill states that lending, staking or income earned through “passive” validator services are treated annually as part of the recipient’s gross income and calculated using a “fair market value” value.
The Digital Assets PARITY Act has not yet been introduced to Congress; was published as a discussion draft intended to open debate among policymakers, stakeholders and the cryptocurrency industry on how to change cryptocurrency tax policy in the US.
Related: Coinbase Executives Deny Lobbying Against Bitcoin’s De Minimis Tax Exemption
Cryptocurrency tax proposal highlights schism in the cryptocurrency industry
“We need transparency around the tax on digital assets, otherwise the business will never be fully accessible on land” – Cody Carbone, CEO of cryptocurrency advocacy organization Digital Chamber, he said in response to the draft discussion.
However, Bitcoiners noted that the bill only includes a de minimis tax exemption for stablecoins and not Bitcoin (BTC), similar to pending legislation including the CLARITY Cryptocurrency Market Structure Act, which also lacks a de minimis BTC tax exemption.
“This is the wrong direction to go,” Pierre Rochard, CEO of The Bitcoin Bond Company, the issuer of BTC financial products, said about the project.
“Bitcoin should be exempt from de minimis tax. Stablecoins are not decentralized and do not require permission. They are not real money; they are simply fiat,” he added.
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