What does Preamble of Digital Asset PARITY Act do?

This bill, formally titled 'To amend the Internal Revenue Code of 1986 to provide for the tax treatment of digital assets,' aims to modify the Internal Revenue Code of 1986.

What does SHORT TITLE. of Digital Asset PARITY Act do?

This bill is formally titled the Digital Asset Protection, Accountability, Regulation, Innovation, Taxation, and Yields Act, also known as the Digital Asset PARITY Act.

What does TAX TREATMENT OF REGULATED PAYMENT STABLECOIN TRANSACTIONS. of Digital Asset PARITY Act do?

This section amends the Internal Revenue Code of 1986 to establish tax treatment for regulated payment stablecoin transactions. Generally, no gain or loss is recognized from the sale or exchange of a regulated payment stablecoin unless the taxpayer's basis is less than 99 percent of the stablecoin's redemption value. In an exchange of a regulated payment stablecoin, the acquirer's basis is deemed to be $1. Transaction costs related to the sale or exchange of a regulated payment stablecoin are not included in the calculation of the stablecoin's basis. A 'regulated payment stablecoin' is defined as a digital asset issued by a permitted payment stablecoin issuer, redeemable for a fixed amount of U.S. dollars, and acquired for a price within 1 percent of $1.00. The definitions of 'payment stablecoin' and 'permitted payment stablecoin issuer' are derived from section 2 of the GENIUS Act. This section does not apply to sales or exchanges by taxpayers who are dealers or traders in securities or commodities. The Secretary is authorized to issue regulations or guidance to implement this section and prevent tax avoidance. The amendments apply to taxable years beginning after December 31, 2025.

What does DIGITAL ASSET TRADING SAFE HARBOR. of Digital Asset PARITY Act do?

This section amends section 864(b) of the Internal Revenue Code of 1986 to create a safe harbor for trading digital assets. The amendment adds a new subparagraph (C) defining trading in digital assets through an independent agent. Trading for a taxpayer's own account, even with employee or agent involvement, is included in the safe harbor, except for dealers in digital assets. The safe harbor applies only to digital assets 'customarily dealt in on a digital asset exchange.' A conforming amendment redesignates and updates subparagraph (D) of section 864(b)(2). The amendments apply to taxable years beginning after the date of enactment of this Act.

What does TAX TREATMENT OF DIGITAL ASSET LENDING AGREEMENTS AND RELATED of Digital Asset PARITY Act do?

This section amends Internal Revenue Code section 1058 to address the tax treatment of digital asset lending agreements. It expands the definition of 'eligible digital assets' within section 1058. The bill modifies basis adjustments for securities and eligible digital assets, factoring in the return to the transferor. Payments made to lenders in lieu of staking rewards, transaction fees, or protocol distributions are treated as gross income. The section clarifies that it does not imply any classification of digital assets as securities under the Securities Act of 1933 or the Securities Exchange Act of 1934. The Secretary of the Treasury is authorized to issue rules to implement these amendments, including application to forks and airdrops. The amendments apply to exchanges in taxable years beginning after the date of enactment.

What does APPLICATION OF WASH SALE RULES TO DIGITAL ASSETS. of Digital Asset PARITY Act do?

This section amends Section 1091 of the Internal Revenue Code of 1986 to expand the definition of 'specified assets' to include digital assets. The term 'specified asset' now includes any stock or security, and any digital asset. Contracts and options to acquire or sell specified assets are also included as specified assets, unless otherwise provided in regulations. The determination of whether an asset is substantially identical to a digital asset will be based on economic exposure, and factors like voting rights, exchange, or blockchain are not determinative. Several sections of the Internal Revenue Code are amended to replace 'stock or securities' with 'specified assets'. The rules of Section 1091(a) regarding wash sales are extended to short sales of specified assets and specified asset futures contracts. These amendments apply to sales, dispositions, and terminations after the date of enactment of this Act.

What does MARK-TO-MARKET ELECTION. of Digital Asset PARITY Act do?

This section amends Section 475 of the Internal Revenue Code of 1986 to allow dealers and traders in actively-traded digital assets to elect mark-to-market accounting. The amendment redesignates existing subsection (g) as (h) and inserts a new subsection (g) to implement this election. Dealers in actively-traded digital assets, upon election, will have this section apply to their digital assets in the same manner as it applies to securities. Traders in actively-traded digital assets can also elect to have subsection (f)(1) apply to their digital assets, mirroring the treatment of securities. The election applies only to digital assets treated as actively traded, as defined by the Secretary. The Secretary is required to issue regulations and guidance to carry out the provisions of this subsection. The amendment applies to taxable years beginning after the date of enactment of this Act.

What does APPLICATION OF CONSTRUCTIVE SALE RULES TO DIGITAL ASSETS. of Digital Asset PARITY Act do?

This section amends Section 1259 to include 'digital asset' after 'debt instrument'. The amendment applies to constructive sales occurring after the enactment of this Act.

What does TREATMENT OF DIGITAL ASSETS ACQUIRED THROUGH VALIDATION of Digital Asset PARITY Act do?

This section amends Chapter 1 of the Internal Revenue Code to establish a new subchapter, Subchapter W, concerning digital assets acquired through validation activities. It introduces rules for the taxation of digital assets acquired through validation, allowing taxpayers to elect to defer inclusion of income and capitalize expenses related to these assets. If an election is made, gains and losses on the disposition of the digital asset during the election period are treated as ordinary income or loss. After the election period, gains and losses are treated as long-term capital gains or losses. The subchapter defines key terms such as 'newly created digital asset,' 'specified taxpayer,' and 'specified transaction costs.' The amendments apply to assets acquired in taxable years beginning after December 31, 2025.

What does CHARITABLE CONTRIBUTIONS AND QUALIFIED APPRAISALS. of Digital Asset PARITY Act do?

This section amends Internal Revenue Code Section 170(f)(11)(A)(ii)(I) to include 'actively traded digital assets'. It adds a sentence to Section 170(f)(11)(B) stating that the requirements of that subparagraph do not apply to contributions of actively traded digital assets. A new paragraph (20) is added to Section 170(f) regarding infrequently traded digital assets, requiring substantiation and valuation rules. For contributions of infrequently traded digital assets exceeding $500, taxpayers must provide a contemporaneous written acknowledgment from the donee organization. The deduction for such assets cannot exceed the gross proceeds from their sale if the organization sells them. The acknowledgment must include specific information, such as donor details, transfer details (including addresses and descriptions), and certification of an arm's length transaction. It establishes a penalty for donee organizations that knowingly furnish false or fraudulent acknowledgments related to digital asset donations. The penalty is the greater of a tax rate multiplied by the sales price or the gross proceeds from the sale. These amendments apply to contributions and acknowledgments made in taxable years beginning after the date of enactment.

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Digital Asset PARITY Act

Last updated: 5/19/2026 · Introduced: 5/19/2026

Author: Max Miller (R-OH)

TL;DR (AI)

The bill establishes specific tax rules for regulated payment stablecoins, generally deferring gain or loss recognition unless the basis is significantly less than the stablecoin's value.
It creates a safe harbor for taxpayers trading digital assets through an independent agent, simplifying tax reporting for many digital asset transactions.
The bill modifies the tax treatment of digital asset lending agreements, defining eligible assets and clarifying how payments and rewards are taxed.
It expands the 'wash sale' rules to include digital assets, preventing taxpayers from avoiding taxes by quickly repurchasing similar assets after a sale.
The bill allows dealers and traders in actively traded digital assets to elect mark-to-market accounting, similar to how securities are treated, and establishes rules for taxing digital assets acquired through validation activities like staking.

119th Congressin committeeOfficial page

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Includes provisions on preamble, short title., and 11 more.

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