SS #59 - The PARITY Act Modernizes Crypto Taxes for a Mainstream Future

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Good morning!

Legislative and governance developments are taking center stage this week, beginning with a bipartisan effort in the U.S. House to modernize the tax code. Representatives have introduced the PARITY Act, a draft bill intended to streamline tax reporting for staking and wash sales while exempting small stablecoin transactions to better align digital assets with traditional financial instruments. Simultaneously, internal tensions have resurfaced within the Aave DAO after Aave Labs unilaterally moved a brand-asset ownership proposal to a Snapshot vote. The move has sparked backlash from delegates and the proposal’s author, who contend that the firm is bypassing community protocols to accelerate a decision that remains under active debate.

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In Today's Edition:

• Headline: The PARITY Act Modernizes Crypto Taxes for a Mainstream Future

• Quick Bites: Aave Labs’ Unilateral Push to Vote on Brand-Rights Proposal Sparks Community Outcry

• Yield of the Week: 9.34% APY on Midas

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HEADLINE

The PARITY Act Modernizes Crypto Taxes for a Mainstream Future

State of play: The bipartisan Digital Asset PARITY Act seeks to modernize the U.S. tax code by streamlining rules for crypto staking, wash sales, and everyday transactions.

• Eliminates capital gains tax on stablecoin purchases under $200 to encourage retail use.

• Applies traditional "wash sale" and "constructive sale" rules to crypto to prevent artificial loss harvesting and tax deferral.

• Offers optional tax deferral on staking/mining rewards ("phantom income") and introduces mark-to-market accounting for active traders.

What’s Next: Expect a period of intense industry lobbying as stakeholders weigh in on the "federally regulated" requirement for stablecoin exemptions. If passed, 2026 will mark a major shift in consumer behavior, as the $200 de minimis exemption would finally make crypto a viable medium for daily payments without a tax-filing nightmare.

Why it Matters: This bill addresses the two biggest hurdles to mainstream crypto adoption: regulatory uncertainty and micro-transaction friction. By aligning digital assets with traditional securities and commodities, it provides the legal "parity" institutional investors need to enter the space with confidence.

Our Take: The PARITY Act is a double-edged sword: while the $200 stablecoin exemption is a massive win for retail adoption, the closure of wash sale loopholes ends a long-standing "tax hack" for crypto traders. Strategically, this signals a transition from the "Wild West" to a mature financial vertical, where success will depend on fundamental growth rather than tax-advantaged trading maneuvers.

QUICK BITES

• Brazil’s Gen Z drives crypto boom as stablecoins.

• Justin Sun's locked World Liberty tokens down $60M since September.

• Aave Labs' unilateral push to vote on brand-rights proposal sparks community outcry.

• Tether-backed Northern Data sold bitcoin mining arm to companies run by Tether's own executives.

YIELD OF THE WEEK

IPOR Llamarisk crvUSD Optimizer: 9.29% APY

• The LlamaRisk crvUSD Optimizer vault manages deposits across Stake DAO vaults, Llamalend markets, and scrvUSD to maximize yields and automate reward compounding.

• All vault assets are presently concentrated in the StakeDAO sreUSD/crvUSD liquidity pool.

• The majority of the vault's annual percentage yield is generated through CRV token rewards.

Midas msyrupUSDp: 9.34% APY

• The msyrupUSDp token tracks a stablecoin yield strategy centered on Maple’s syrupUSDT, specifically targeting returns from Aave and Fluid within the Plasma blockchain ecosystem.

• Portfolio management and risk monitoring are performed by Edge Capital, which serves as the designated Risk Manager for the strategy.

• Participants are subject to a 10% performance fee on generated returns and a 0.5% fee for processed instant redemptions.

AUTOfinance baseUSD: 9.16% APY

• The Autopools Protocol utilizes algorithmic optimization to rebalance liquidity provider assets across various decentralized exchanges, lending platforms, and DeFi protocols.

• The protocol’s flagship strategies are chain-agnostic, though current deployments focus on maximizing yield for USD stablecoins integrated with DEXs and lending markets on the Base network.

• Designed for ease of use by retail participants, the protocol currently operates without charging management or performance fees to its users.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.