US Congress Aims to Close Cryptocurrency Tax Loopholes

The US Congress has taken a significant step towards regulating cryptocurrency trading by introducing the Digital Asset PARITY Act. This bipartisan proposal aims to close tax loopholes that have allowed crypto traders to exploit a gap in the tax code.

Under current law, wash-sale rules apply only to 'stock or securities', excluding digital assets. This has enabled traders to sell Bitcoin at a loss, buy back in the next day, and claim the tax deduction, a maneuver explicitly barred in equity markets.

The PARITY Act draft closes this gap by rewriting Section 1091 to cover actively traded digital assets, notional principal contracts tied to them, and related derivatives. The wash-sale changes take effect upon enactment, with a familiar 30-day-before-and-after replacement window applying.

However, the bill also introduces a stablecoin carveout for regulated payment stablecoins. Sellers would recognize no gain or loss on the sale of these coins, provided the transaction stays within a $0.99-$1.01 per-unit band.