PARITY Act Crypto 2026: Stablecoin Tax Reform in the US

The Digital Asset PARITY Act is a bipartisan US tax proposal that rewrites how digital assets, especially payment stablecoins, are treated under the federal tax code. Think of it as the IRS finally learning the difference between a dollar-pegged token used to pay a vendor and a speculative asset held for gain.

That distinction matters because the current code treats both the same way. The bill aims to change that: routine stablecoin payments would work like cash for tax purposes, and crypto trading would follow the same rules that already apply to other financial instruments.

The bill was introduced by Representatives Max Miller (Republican, Ohio) and Steven Horsford (Democrat, Nevada), both members of the House Ways and Means Committee, as a bipartisan discussion draft first circulated in December 2025 and revised on March 26, 2026. 

Miller has stated he wants the bill before Congress by August 2026. It is still a discussion draft, not law. The legislative language is being refined, and there has been discussion about crypto tax provisions fitting into a broader reconciliation package, but passage is not guaranteed.

The bill targets four areas where the current tax code creates friction for US businesses and platforms using digital assets:

1. Stablecoin payments. The proposal removes capital gains obligations from routine payments made with regulated, dollar-pegged stablecoins, provided the token traded within 1% of $1.00 for at least 95% of trading days over the prior 12 months. 

Paying a contractor in USDC would work the same way a wire does today, with no extra reporting step on the other side.

2. Staking and mining rewards. Taxpayers could elect to defer tax on staking and mining rewards for up to five years, after which the rewards would be taxed as ordinary income at fair market value. This addresses what the industry calls phantom income: owing taxes on assets you cannot yet sell to cover the bill.

3. Wash sale and constructive sale rules. The draft rewrites Section 1091 to cover actively traded digital assets, closing a gap that lets crypto traders sell at a loss, immediately repurchase the same asset, and still claim the deduction. The IRS bars that move in equity markets. Under PARITY, the same rule applies.

4. Mark-to-market accounting. Professional traders could elect mark-to-market accounting, requiring annual recognition of gains and losses based on fair market value, consistent with how dealers in other financial instruments already report.

Three bills are reshaping US crypto regulation at the same time. The CLARITY Act covers market structure (Securities and Exchange Commission vs. Commodity Futures Trading Commission jurisdiction). The GENIUS Act, signed in July 2025, set the licensing framework for stablecoin issuers.

The tax bill determines what happens on the return when businesses actually use those assets.

For a US fintech or payment platform, the tax proposal is the most operationally relevant of the three. The other two set the regulatory perimeter and define which tokens qualify for relief, but PARITY is what shows up on the tax return.

Earlier versions of the bill leaned on a $200 de minimis exemption, a minimum threshold below which gains go unreported. The flaw was that Bitcoin and USDC would have qualified on the same terms, alongside every meme coin in between. 

The March 26, 2026 rewrite replaced that with a peg stability safe harbor, meaning tax relief tied only to regulated, dollar-pegged stablecoins that have held their value within a tight band over time. Think of it as the IRS requiring proof that a token actually traded like a dollar before treating it like one.

Which tokens qualify in practice?

Congress does not name specific assets. GENIUS licensing and PARITY's peg stability test do that work implicitly. USDC, issued by Circle, is a fully backed, USD-only payment stablecoin with independently attested reserves, positioning it well for GENIUS licensing.

USDT is the largest stablecoin by market cap, but Tether has not registered under the federal framework that PARITY's safe harbor requires. The USDT most businesses hold today would still trigger a taxable event on every payment, regardless of how widely it is used.

The bill fixes the stablecoin payment problem, not the broader one.

Paying a contractor in BTC still triggers a taxable disposal, which means three steps before the IRS considers it closed.

• Tracking cost basis and fair market value at the moment of the transaction

• Recognizing any gain or loss

• Reporting it to the IRS

Most analysts land on the same read. Bitcoin remains classified as property regardless of transaction size, and every payment in it still requires a gain/loss calculation. For product teams building Bitcoin payment infrastructure, PARITY changes nothing.

The bill lets certain staking participants defer tax on rewards for up to five years, recognizing income only when those rewards are sold or spent. PoW miners do not qualify for that deferral.

Under the current draft, mining income stays subject to immediate recognition as ordinary income the moment it lands. The Bitcoin Policy Institute has pushed back hard on this asymmetry, calling it a lack of technological neutrality, and that question goes into markup unresolved.

The tax proposal is one layer of a three-part framework, but it does not determine which tokens qualify or how they get classified. Whether a specific token enters the safe harbor rests on GENIUS Act licensing.

How the SEC and CFTC draw the line between securities and commodities hinges on the CLARITY Act. Until both are fully operational, finance and compliance teams cannot map every token and use case to a definitive tax outcome.

The discussion draft is not law yet, but the infrastructure decisions it requires are already overdue.

Start there. If your payment infrastructure relies on USDT, algorithmic tokens, or basket-pegged assets, every payment will remain a taxable disposal under any version of PARITY. If you run on USDC or bank-issued dollar tokens, find out whether your issuer is pursuing GENIUS Act licensing.

That one question tells you whether you are building toward safe harbor eligibility or away from it.

Form 1099-DA is live in 2026, whether or not PARITY passes. Before you assume your reporting is ready, ask your exchange, custodian, or payment processor:

• Do they issue 1099-DA with the correct cost basis per token lot?

• Do their systems flag which tokens could qualify as Regulated Payment Stablecoins?

• Do they have a plan for wash-sale and mark-to-market reporting if the bill passes?

If the answers are vague, that is a data problem your finance team will inherit.

Mixed payment stacks are the norm. The question is not which assets to use, but which layer of your infrastructure owns the reporting burden. Make that decision before a reconciliation issue forces it.

Four working categories cover most cases:

• GENIUS-eligible payment stablecoins (potential safe harbor)

• Non-eligible stablecoins (taxable disposal on every payment)

• Volatile assets under wash-sale and mark-to-market rules

• Yield-bearing products treated as investment assets

Build that taxonomy now. It tells you which assets belong in a payments product and which belong in a trading or treasury product, and gives your compliance team something to work with before the final bill language exists.

This classification also helps you identify the right infrastructure partners, because not all of them are built for where regulation is heading.

For businesses moving toward GENIUS-compatible payment stablecoins, Mercuryo's on- and off-ramp infrastructure supports USDC flows across multiple chains, keeping your payment stack aligned as the regulatory framework takes shape.