Bitcoin advocates are questioning a newly drafted bipartisan tax bill, arguing that the legislation harshly penalizes miners with exorbitant tax structures.
The draft legislation, known as the Parity Act, was circulated by U.S. Representatives Max Miller and Stephen Horsford. The bill aims to reform the Internal Revenue Code to clarify taxes on digital assets in the United States.
Why do crypto leaders oppose the Parity Act?
However, an offer Instead, it ignited discord within the broader cryptocurrency industry.
At the heart of the controversy lies the bill’s disparate treatment of different blockchain consensus mechanisms. The draft aims to classify profits from cryptocurrency production as gross income, calculated at fair market value upon receipt.
Most importantly, the legislation allows participants to Proof-of-stake networks, such as Ethereum and Solana, to defer these taxes until the asset is eventually sold.
On the contrary, Bitcoin works on Proof of work system Which requires a large upfront capital Specialized appliances and significant ongoing energy costs. Under the current parity bill, bitcoin miners are excluded from this tax deferral.
Conner Brown, Managing Director of the Bitcoin Policy Institute male The draft maintains double taxes on Bitcoin mining while providing targeted relief for staking operations. Brown said the proposed legislation arbitrarily picks economic winners and losers.
“(The bill) creates a two-tier tax system, offering deferral to stakeholders while leaving miners stuck with the same phantom income problem that both parties have acknowledged needs to be fixed,” Bitcoin Policy Institute Argue.
Moreover, the bill would ease the tax treatment of certain uses Payment stablecoins defined by the GENIUS Act in everyday payments.
The Bitcoin Policy Institute said the provision would make it difficult for consumers to use Bitcoin for small retail purchases. Those transactions could still trigger capital gains reporting requirements, adding a tax burden to everyday spending, she said.
“(The draft) provides a $200 minimum exemption for payments in stablecoins but not bitcoin, which alone represents 60% of the market capitalization of all digital assets. This means that someone who buys a cup of coffee with bitcoin would still face a capital gains calculation. The exemption from minimum daily bitcoin transactions is essential for digital assets to mature as they grow into a global medium of exchange. Any serious legislation on promoting parity should include it,” the research center added.
Industry experts highlight room for improvements
While Bitcoin hardliners oppose exemptions, broader industry lobby groups are trying to use the draft as a starting point for broader legislative reform.
This was welcomed by Cody Carbone, CEO of the Digital Chamber Parity law legislation But he stressed the need for major adjustments to prevent the industry from moving abroad.
“We are excited to see the draft for bipartisan digital asset tax discussion. We have prioritized tax clarity this entire Congress — hence the excitement with which the draft has emerged so that we can begin to truly advocate in a public forum.”
While he was pleased that the draft for public discussion was finally available, he noted that the current iteration required significant improvements.
Against this backdrop, Carbone outlined several key reviews that his organization is calling for. This includes taxing both staking and mining rewards only upon sale or disposition, creating a broader de minimis exemption beyond stablecoins, and shielding basic technical actions, such as transferring cryptocurrencies between personal wallets, from taxation.
He also called for simplifying tax forms to avoid duplication of reporting and setting clearer guidelines for lending and donating digital assets.
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