A bipartisan discussion draft introduced by Representatives Steven Horsford and Max Miller would close one of the most widely used tax strategies in crypto while carving out a new exemption for regulated stablecoins. The Digital Asset PARITY Act, released through the Digital Chamber, rewrites IRS Section 1091 to bring digital assets under the same wash-sale rules that have governed stock markets for decades.
The Wash-Sale Loophole Closes
Under current law, Section 1091 wash-sale rules apply only to "stock or securities." Because crypto is classified as property, not a security, traders can sell Bitcoin at a loss, buy it back the next day, and still claim the tax deduction. Stock investors have been barred from this exact move since 1921.
The PARITY Act replaces "stock or securities" with "specified assets," a category that now includes actively traded digital assets, notional principal contracts tied to digital assets, and related derivatives like options, forward contracts, futures, and short positions. The standard 30-day window applies: sell at a loss and repurchase within 30 days before or after, and the loss is disallowed.
This is not a new idea. The IRS has signaled frustration with the gap for years, and earlier legislative attempts stalled. What makes this draft different is its bipartisan sponsorship and its bundling with a stablecoin incentive, giving both sides of the aisle something to support.
The effective date is upon enactment, with no phase-in period. If it passes, the loophole closes immediately.
Stablecoins Get a Tax Carveout
The same bill that takes away a tax benefit from traders hands one to stablecoin users. Under the proposed framework, sellers of "Regulated Payment Stablecoins" would recognize no gain or loss on transactions, provided the stablecoin stays within a $0.99 to $1.01 per-unit band.
When the exemption applies, the taxpayer's basis is fixed at $1.00 per unit. The tiny fluctuations that currently create thousands of taxable micro-events for anyone spending stablecoins would simply vanish from tax calculations.
To qualify, a stablecoin must meet several conditions:
- It must be a payment stablecoin under the GENIUS Act framework
- It must be issued by a permitted issuer
- It must be pegged solely to the U.S. dollar
- It must trade within 1% of $1.00 on at least 95% of trading days over the prior 12 months
- The taxpayer must acquire it within 1% of $1.00
Brokers and dealers in securities or commodities are excluded from the carveout. Congress is also still weighing a $200-per-transaction threshold and possible annual aggregate limits.
Why Congress Is Drawing This Line Now
The stablecoin market sits at approximately $316 billion with transaction volume exceeding $34 trillion annually, according to figures cited in the draft. That volume makes stablecoins the single largest use case for blockchain-based payments, and the current tax treatment is a barrier to adoption.
Every time someone uses USDC or USDT to buy coffee, they technically owe capital gains tax on whatever fraction of a cent the stablecoin's price deviated from $1.00 between acquisition and spending. The compliance burden is absurd relative to the amounts involved. A $5 latte might generate a $0.003 taxable event.
The PARITY Act's logic: if a digital asset functions like a dollar, tax it like a dollar. If a digital asset functions like a speculative investment, apply the same rules as stocks. The bill uses the tax code to formalize a distinction between "crypto as payment" and "crypto as trading" that regulators have danced around for years.
This framing also aligns with the GENIUS Act stablecoin legislation working through the Senate. Both bills assume a future where regulated, dollar-pegged stablecoins serve as payment rails, and both want the tax code to stop treating them like volatile assets.
What This Means for Crypto Card Users
For anyone spending crypto through a card, the stablecoin exemption could be significant. Cards funded with stablecoins already avoid the volatility risk of spending BTC or ETH, but they still create taxable events on every swipe. If the PARITY Act passes, spending a qualifying stablecoin through a crypto card would generate no tax liability at all, as long as the stablecoin stayed within the 1% band.
That changes the math for daily spenders. A user loading USDC onto a Kolo card or spending through KAST would no longer need to track basis and disposition on every transaction. The compliance cost drops to zero.
On the other side, traders who have been harvesting losses by selling and immediately rebuying BTC, ETH, or SOL would lose one of their most effective tax strategies. The 30-day window is the same one stock investors have lived with for over a century, and crypto's exemption from it was always a timing question, not a policy choice.
The Open Questions
The draft leaves several details unresolved. The $200-per-transaction threshold Congress is considering could exclude larger stablecoin transfers from the exemption. Annual aggregate limits could cap the benefit. And the GENIUS Act framework it references has not yet passed the Senate, meaning the definition of "Regulated Payment Stablecoin" is itself still in flux.
The Coinbase opposition to the GENIUS Act's stablecoin yield compromise adds another variable. If the underlying stablecoin framework changes, the PARITY Act's exemption criteria change with it.
BTC was trading at $66,684 as of March 29, 2026, with the Fear and Greed Index at 24 (Fear). The broader market showed modest declines across major assets: ETH at $2,005 (-0.9%), SOL at $82.02 (-1.6%), and BNB at $610.87 (-1.0%).
Overview
The Digital Asset PARITY Act is a bipartisan discussion draft that would apply stock-market wash-sale rules to all actively traded digital assets, closing a loophole that let crypto traders sell at a loss and immediately rebuy while claiming the deduction. The same bill exempts regulated stablecoins from capital gains tax when transactions stay within 1% of $1.00, fixing the compliance nightmare of tracking micro-gains on every stablecoin payment. If passed alongside the GENIUS Act, it would create a clear tax-code distinction between crypto used for payments and crypto used for speculation.
