Bitcoin supporters are raising concerns about the newly established bipartisan tax bill, arguing that it imposes excessive tax burdens on miners.
The draft bill circulated by U.S. Representatives Max Miller and Steven Horsford is called the PARITY Act. This bill aims to comprehensively amend the Internal Revenue Code to clarify the taxation of digital assets in the United States.
Cryptocurrency leaders, reasons for opposing the PARITY Act?
However, this proposal has sparked controversy within the broader cryptocurrency industry.
The core of the controversy lies in the differential treatment of blockchain consensus mechanisms. The draft stipulates that the income generated from cryptocurrency creation should be included in total income based on the market price at the time of receipt.
In particular, this bill grants participants in proof-of-stake networks like Ethereum and Solana the option to defer taxation until the point of asset sale.
On the other hand, Bitcoin requires substantial initial capital, including specialized hardware and ongoing energy costs in a proof-of-work system. In this PARITY bill draft, Bitcoin miners have been excluded from the tax deferral provision.
Connor Brown, managing director of the Bitcoin Policy Institute, stated that while maintaining dual taxation related to mining, it provides optional relief for staking. Brown argued that this bill arbitrarily determines economic winners and losers.
"[This bill] provides tax deferral for staking participants, while leaving the nominal income issue, which both parties have acknowledged as requiring correction, unresolved for miners, thus creating a dual taxation system." – claimed the Bitcoin Policy Institute.
Additionally, this draft bill is designed to facilitate the application of tax benefits for the use of payment stablecoins as defined in the specific GENIUS Act.
The Bitcoin Policy Institute stated that this provision makes it difficult for consumers to use Bitcoin for small payments. Such transactions still incur capital gains reporting obligations, adding an extra tax burden to everyday spending.
"[This draft] offers a $200 small tax exemption for payment stablecoins but does not apply to Bitcoin. However, Bitcoin accounts for 60% of the total digital asset market capitalization. This means that even buying a cup of coffee with Bitcoin requires capital gains calculation. A small exemption is essential even for everyday Bitcoin transactions. It is vital as Bitcoin grows as a global medium of exchange. If this bill aims to promote true fairness, it must be included." added this think tank.
Industry experts noted areas for improvement.
Bitcoin conservatives are critical of the tax exemption clause, but industry groups are trying to use this draft as a starting point for broad legislative reform.
Cody Carboni, representative of the Digital Chamber, expressed support for the PARITY bill but emphasized the need for significant amendments to prevent the industry's overseas migration.
"I am looking forward to the emergence of a bipartisan digital asset tax discussion draft. Throughout this congressional session, we have prioritized tax clarity, and I am excited to finally begin substantive discussions in a public forum based on the draft that has been released." he stated.
He expressed hope for the preparation of a public discussion draft but pointed out that the current version requires significant amendments.
Carboni, the representative, presented key requirements for this. Taxation on both staking and mining rewards upon sale or disposition, comprehensive small exemptions beyond stablecoins, and tax exemptions for basic technical actions such as coin movement between personal wallets.
He also urged for the introduction of simplified tax forms to prevent duplicate reporting and the establishment of clear guidelines for digital asset lending and donations.