US Congress Proposes Digital Asset PARITY Act to Close Tax Loopholes

The US Congress has introduced the Digital Asset PARITY Act, a bipartisan discussion draft aimed at rewriting Section 1091 of the tax code. This move is expected to close tax loopholes for cryptocurrency traders, who have long exploited a gap in the current law.

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

The PARITY Act draft would cover actively traded digital assets, notional principal contracts tied to them, and related derivatives, including options, forward contracts, futures contracts, and short positions. The familiar 30-day-before-and-after replacement window applies, and the wash-sale changes take effect upon enactment.