Last year, Kraken sent 56 million tax forms to the Internal Revenue Service. Nearly a third of those were for transactions worth less than a dollar, and more than 75% were for trades under $50. These numbers, shared by the crypto exchange last month, have strengthened calls in Congress to rethink how small digital asset transactions are taxed in the U.S.
A Study, Not an Exemption
A bipartisan group of House lawmakers introduced a bill on Tuesday that takes the first formal step toward addressing this issue. Called the Digital Asset Protection, Accountability, Regulation, Innovation, Taxation and Yields Act — or PARITY Act — the bill doesn’t create a tax break for small crypto transactions. Instead, it directs the Treasury Department to study whether such a break should exist and report back within 180 days on what relief it can offer under its current authority.
Innovation should create opportunity for everyone, not just those already ahead. The Digital Asset PARITY Act modernizes the tax code for the digital age, creates clearer rules, and ensures emerging financial tools help expand financial inclusion and pathways to wealth. It is… pic.twitter.com/44B8mpEQLl — Rep. Steven Horsford (@RepHorsford) May 19, 2026
The bill also calls for a study on how much paperwork small crypto transactions create for taxpayers, and on the total number of transactions under $200 reported to the IRS each year. The Treasury would also need to outline what resources the IRS would require if a de minimis exemption were eventually passed into law — and what types of fraud or abuse such an exemption might invite.
Republican Representative Max Miller, one of the bill’s sponsors, said the U.S. tax code hasn’t kept up with the rapid growth of digital assets. “As America continues to lead the world in innovation, our tax code has failed to keep pace with the rapid growth of digital assets and modern financial technology,” Miller said in a statement.
What Else the Bill Covers
The PARITY Act includes a section from an earlier draft that would treat regulated payment stablecoins like cash for tax purposes. Under this rule, no gains or losses would be recognized on stablecoin transactions unless the cost basis of those tokens falls below 99% of their redemption value.
The bill also aims to apply wash sale rules to crypto — a change that would close a loophole that stock investors can’t use but crypto traders currently can.
Related Reading: Zcash Soars 88% In 30 Days: Is ZEC The Stealth Winner Of This Crypto Cycle?
Democratic Representatives Steven Horsford and Suzan DelBene joined Miller and Republican Rep. Mike Carey in introducing the bill. Horsford had previously released a discussion draft of the legislation back in March.
A Race Against the Clock
Miller told Bloomberg Tax he believes the bill can pass before this Congress ends. That deadline falls in January, after the November midterm elections in which every House seat will be contested.
Featured image from Getty Images, chart from TradingView
Frequently Asked Questions
Here is a list of FAQs about Washingtons new bill requiring an IRS study on crypto tax rules
Beginner Level
1 What is this new bill about
Its a proposal in Washington that tells the IRS to officially study how people use cryptocurrency and how current tax rules apply to it
2 Does this mean crypto taxes are changing right now
No The bill just asks for a study No tax rules change until the study is finished and Congress decides to act on it
3 Why does the IRS need to study crypto at all
Crypto is complicated The IRS wants to understand things like decentralized finance staking and crypto loans to make sure the tax rules are fair and easy to follow
4 Will I have to pay more taxes on my crypto because of this bill
Not directly The bill doesnt raise taxes Its about figuring out the best way to tax crypto in the future
5 I only buy and hold Bitcoin Should I worry
Probably not This study is more focused on complex activities like lending trading and earning rewards not just buying and holding
Intermediate Level
6 What specific crypto activities will the IRS study
The bill asks the IRS to look at staking rewards lendingborrowing decentralized exchanges airdrops and how to tax transactions that dont involve traditional money
7 How long will the study take
The bill requires the IRS to submit a report within one year of the bill passing So we likely wont see results until at least 2026
8 Could the study lead to a simpler way to report crypto taxes
Yes thats one goal The study will look at whether current forms work for crypto or if a new simpler reporting method is needed
9 What happens after the IRS finishes the study
The IRS sends its findings to Congress Then lawmakers can propose new laws or ask the IRS to change its regulations based on what they learned
10 Does this bill affect how I report my crypto trades for 2024 taxes
No You still follow the current rules for 2024 report any sale trade or income as