Crypto regulations are still catching up with the pace of the industry. For retailers and small businesses, they remain complex, inconsistent and often unclear.
Both sides of Congress are trying to improve existing regulations.
Now, a new bipartisan proposal aims to simplify and modernize the way the United States taxes digital assets.
The bill seeks to amend the Internal Revenue Code of 1986 to create a clearer and more equitable system for cryptocurrency users and businesses.
Related: Passage of the GENIUS Act Lays the Groundwork for the Stablecoin Market to Reach $2 Trillion by 2028
On Dec. 20, Rep. Max Miller (R-Ohio) and Rep. Steven Horsford (D-Nev.) introduced the bill called Law on Protection, Responsibility, Regulation, Innovation, Taxation and Returns on Digital Assets (PARIDAD).
The bill outlines five major reforms:
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De minimis exemption for stablecoin payments
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Definition and obtaining income from digital assets
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Tax treatment of digital asset lending
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Expansion of “wash sale” rules
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Market value choice for distributors and dealers
Lawmakers said the goal is to align the treatment of digital assets with traditional finance while reducing unnecessary administrative burdens.
One of the most notable provisions would be small stablecoin exempt transactions of capital gains taxes.
Under proposed Section 139J, profits less than $200 from the sale or exchange of “regulated payment stablecoins,” tokens pegged to the U.S. dollar and issued by approved entities, would not be considered taxable income.
This de minimis rule reflects foreign currency exemptions and aims to encourage daily crypto payments without generating complex reporting obligations.
The bill also gives the Treasury Department the power to limit the exemption to prevent tax abuse or evasion.
The draft too expands non-recognition treatment to legitimate digital asset lending arrangements, expanding existing securities lending rules under Section 1058. Only liquid and fungible digital assets such as Bitcoin (BTC) or Ether (ETH) would qualify.
This would exclude NFTs or synthetic instruments that could be used for tax manipulation.
Additionally, the legislation is closing a long-standing loophole in the wash sales rule.
A wash sale occurs when an investor sells an asset at a loss and then repurchases the same or a “substantially identical” asset within 30 days before or after the sale.
The IRS does not allow the loss to be claimed for tax purposes because the investor has not actually changed his position and still owns essentially the same investment. Instead, the disallowed loss is added to the cost basis of the newly purchased shares. This means that the loss can only be recognized later, when the shares are finally sold.
This rule prevents investors from creating artificial tax losses by holding their holdings.
However, the laundering trade rules do not yet include digital assets. Cryptocurrency traders can sell a token at a loss to reduce their taxable income and then instantly buy it back to maintain their position. This loophole allows them to reap tax losses without actually changing their investments.
The new bill fixes this problem by adding digital assets to the wash sale rule. This would prevent people from using quick cryptocurrency trades to create artificial tax deductions.
Additionally, the proposal allows traders and dealers to choose mark-to-market accounting for actively traded digital assets, aligning cryptocurrencies with the treatment of securities.
It also defines terms such as “digital asset exchange” and “digital asset” within the tax code, reducing ambiguity for investors and companies.
If enacted, most of the provisions would take effect beginning in fiscal year 2026, giving the Treasury and the Internal Revenue Service time to draft accompanying regulations.
Related: Bitcoin Basics: ‘The way cryptocurrencies are used is the way taxes are paid’
This story was originally published by TheStreet on December 21, 2025, where it first appeared in the Politics section. Add TheStreet as a preferred source by clicking here.
