119 S2207 IS: To amend the Internal Revenue Code of 1986 to reform the treatment of digital assets.
U.S. Senate
2025-06-30
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
1.Definition of digital assetSection 7701 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:(51)(A)Subject to subparagraph (B) and except as otherwise provided by the Secretary, the term digital asset means any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology as specified by the Secretary.(B)(i)Except as otherwise provided by the Secretary, in the case of any digital asset which is a representation of a financial asset which is itself not a digital asset, such asset—(I)shall not be treated as a digital asset, and(II)for purposes of this title, and except as otherwise provided by law, shall be treated as such financial asset.(ii)For purposes of this subparagraph, as specified by the Secretary, the term financial asset means an asset that trades on established markets or which is used as a medium of exchange, store of value, or unit of account, and shall exclude a payment stablecoin (as defined in section 1091(a)(3)).(C)Representations of other propertyFor purposes of this paragraph, as specified by the Secretary pursuant to regulation, in the case of a digital asset which is a representation of property other than a financial asset, such digital asset shall be treated in the same manner as the property which it represents.(52)Actively traded digital assetExcept as otherwise provided by the Secretary, the term actively traded digital asset means a fungible digital asset for which quotations are readily available on a digital asset exchange..2.De minimis gain or loss from sale, exchange, or disposition of digital assets(a)Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 139I the following new section:139J.De minimis gain or loss from sale, exchange, or disposition of digital assets(a)Subject to subsection (b), gross income shall not include gain or loss from the sale, exchange, or disposition of digital assets to purchase products or services in a personal transaction (consistent with section 988(e)(3)), unless the sale, exchange, or disposition is for—(1)cash or cash equivalents, or(2)other digital assets.(b)(1)Subsection (a) shall not apply in the case of any sale, exchange, or disposition for which—(A)the total value of such sale, exchange, or disposition exceeds $300, or(B)the total loss which would otherwise be recognized with respect to such sale, exchange, or disposition exceeds $300.(2)For purposes of this subsection, all sales, exchanges, or dispositions which are part of the same transaction (or a series of related transactions) shall be treated as one sale, exchange, or disposition.(3)If, after applying subsection (a) to a transaction, the taxpayer’s total gain for the taxable year from transactions described in subsection (a) exceeds $5,000, no further exclusion shall apply for such year.(c)Except as otherwise provided by the Secretary, subsection (a) shall not apply to a sale, exchange, or disposition of digital assets for which the principal purpose of such sale, exchange, or disposition is to eliminate gains.(d)A taxpayer shall maintain books and records or separate wallets or accounts (as determined by the Secretary) which distinguish between sales, exchanges, or dispositions of digital assets eligible for the exclusion from gross income under subsection (a) and sales, exchanges, or dispositions which are not eligible for the exclusion.(e)(1)In the case of any taxable year beginning in a calendar year after 2026, each dollar amount in subsection (b)(1) shall be increased by an amount equal to—(A)such dollar amount, multiplied by(B)the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2025
for calendar year 2016
in subparagraph (A)(ii) thereof.(2)Any increase determined under paragraph (1) shall be rounded to the nearest multiple of $10.(f)The Secretary may prescribe such regulations or other guidance as may be necessary to carry out the purposes of this section, including—(1)requirements relating to recordkeeping and broker information reporting,(2)anti-abuse standards which are consistent with the purposes of this section, which may include defining related transactions to avoid unintended application of the exclusion from gross income under subsection (a),(3)allocation of basis and characterization of appreciation, and(4)treatment of mixed transactions which contain both goods or services and property described in paragraph (1), (2), or (3) of subsection (a).(g)This section shall not apply to taxable years beginning after December 31, 2035..(b)The table of sections for part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 139I the following new item:Sec. 139J. De minimis gain or loss from sale, exchange, or disposition of digital assets.
.(c)The amendments made by this section shall apply with respect to transactions entered into after December 31, 2025.3.Tax treatment of digital asset lending agreements and related matters(a)Section 1058 of the Internal Revenue Code of 1986 is amended by—(1)in the heading, by striking securities
and inserting specified assets
,(2)in subsection (a), by striking securities (as defined in section 1236(c))
and inserting specified assets
, and(3)striking securities
each place it appears and inserting specified assets.
.(b)Section 1058(b)(3) of the Internal Revenue Code of 1986 is amended by inserting other than as a result of such agreement being fixed-term, except as otherwise provided by the Secretary
after transferred
.(c)Section 1058(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following: All appropriate basis adjustments to specified assets subject to an agreement under subsection (b) shall be made, as determined by the Secretary, including upon the return of the lent specified assets to the taxpayer.
.(d)Section 1058 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsections:(d)For purposes of this section, the term specified asset means—(1)a security (as defined in section 1236(c)), or(2)an actively traded digital asset.(e)An amount equal to the income which would otherwise accrue to the lender but for a lending transaction under this section shall be included in the gross income of the lender and the character of such income shall remain unchanged.(f)The Secretary may prescribe such regulations or other guidance as may be necessary to carry out the purposes of this section, including the application of the provisions of this section to digital asset forks, digital asset airdrops, and fees associated with digital asset lending.(g)This section shall not apply to taxable years beginning after December 31, 2035..(e)The table of sections for part IV of subchapter O of chapter 1 of the Internal Revenue Code of 1986 is amended by striking the item relating to section 1058 and inserting the following new item:Sec. 1058. Transfers of specified securities under certain agreements..(f)The amendments made by this section shall apply to taxable years beginning after the date of enactment of this Act.4.Loss from wash sales of specified assets(a)Section 1091 of the Internal Revenue Code of 1986 is amended to read as follows:1091.Loss from wash sales of specified assets(a)Disallowance of loss deduction(1)No deduction shall be allowed with respect to any loss claimed to have been sustained from any sale or other disposition (including any termination) of specified assets where it appears that, within a period beginning 30 days before the date of such sale or other disposition and ending 30 days after such date, the taxpayer has—(A)acquired (by purchase, by an exchange on which the entire amount of gain or loss was recognized by law, or by entering into) substantially identical specified assets, or(B)entered into a contract or option to acquire, or notional principal contract in respect of, substantially identical specified assets.(2)Paragraph (1) shall not apply if—(A)the taxpayer is a dealer in specified assets,(B)the loss is sustained in a transaction made in the ordinary course of its business as a dealer, and(C)the acquisition (or the entering into of the contract or option to acquire or notional principal contract) which (without regard to this paragraph) would have resulted in the non-deductibility of the loss was similarly made in the ordinary course of such business.(3)Exception for stablecoins(A)Except as otherwise provided by the Secretary, paragraph (1) shall not apply to a loss from the sale or disposition of a payment stablecoin or other stablecoin.(B)Subject to subparagraph (C), for purposes of this paragraph, the term payment stablecoin means a digital asset—(i)that is, or is designed to be, used as a means of payment or settlement, and(ii)the issuer of which—(I)is obligated to convert, redeem, or repurchase for a fixed amount of monetary value (not including a digital asset denominated in a fixed amount of monetary value), and(II)represents that such issuer will maintain, or creates the reasonable expectation that such issuer will maintain, a stable value relative to the value of a fixed amount of monetary value.(C)The term payment stablecoin shall not include a digital asset that is—(i)a national currency,(ii)a deposit (as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)), including a deposit recorded using distributed ledger technology, or(iii)a security, as defined in section 2 of the Securities Act of 1933 (15 U.S.C. 77b), section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c), or section 2 of the Investment Company Act of 1940 (15 U.S.C. 80a–2).(b)Specified assets acquired less than specified assets soldIf the amount of specified assets acquired (or covered by the contract or option to acquire or notional principal contract) is less than the amount of specified assets sold or otherwise disposed of, then the particular specified assets the loss from the sale or other disposition of which is not deductible shall be determined under regulations prescribed by the Secretary.(c)Specified assets acquired not less than specified assets soldIf the amount of specified assets acquired (or covered by the contract or option to acquire or notional principal contract) is not less than the amount of specified assets sold or otherwise disposed of, then the particular specified assets the acquisition of which (or the entering into of the contract or option to acquire or notional principal contract of which) resulted in the non-deductibility of the loss shall be determined under regulations prescribed by the Secretary.(d)Adjustment to basis in case of wash sale(1)The basis of the specified asset acquired (or the contract, option, or notional principal contract entered into) shall be increased by the amount of the deduction disallowed under subsection (a).(2)Rules with respect to certain acquisitions(A)In any case in which—(i)the taxpayer enters into a contract or option to acquire, or notional principal contract in respect of, substantially identical specified assets (within the period specified in subsection (a)),(ii)the taxpayer also acquires (within the period specified in subsection (a)) substantially identical specified assets and such acquisition would, but for the entering into of the contract, option, or notional principal contract described in clause (i), have triggered a disallowance under subsection (a), and(iii)the contract, option, or notional principal contract matures, expires, is exercised, or otherwise terminates without the delivery or receipt of money or property during the term of the contract, option, or notional principal contract (other than at the time the contract, option, or notional principal contract is entered into) or upon such termination,then, subject to such exceptions as the Secretary shall prescribe (including with respect to non-abusive wash sale basis adjustment practices), paragraph (1) shall apply to the substantially identical specified assets described in clause (ii) and not to the contract, option, or notional principal contract described in clause (i).(B)Special rule for contracts and optionsSubject to such exceptions as the Secretary shall prescribe (including with respect to non-abusive wash sale basis adjustment practices), if the acquisition of any substantially identical specified asset is pursuant to a contract or option described in subparagraph (A)(i), then, notwithstanding whether such asset was acquired within the period specified in subsection (a), paragraph (1) shall apply to the substantially identical specified asset acquired pursuant to the contract or option and not to the contract or option. (e) Certain short sales of specified assets and contracts To sell Rules similar to the rules of subsection (a) shall apply to any loss realized on the closing of a short sale of (or the sale, disposition, or termination of a contract or option to sell or a short notional principal contract in respect of) specified assets if, within a period beginning 30 days before the date of such closing and ending 30 days after such date, another such short sale of (or contract or option to sell or short notional principal contract in respect of) substantially identical specified assets was entered into by the taxpayer.
(f)This section shall not fail to apply to a contract or option to acquire or sell specified assets solely by reason of the fact that the contract or option settles in (or could be settled in) cash or property other than such specified assets.(g)For purposes of this section, the term specified asset means any of the following:(1)Any security (as defined in section 475(c)(2)), including contracts or options to acquire or sell securities.(2)Except as otherwise provided by the Secretary—(A)any digital asset,(B)any notional principal contract with respect to any digital asset described in subparagraph (A), and(C)any evidence of an interest in, or a derivative instrument in, any digital asset described in subparagraph (A) or (B), including any option, forward contract, futures contract, short position, and any similar instrument in such a digital asset.(h)The Secretary may prescribe such regulations or other guidance as may be necessary to carry out the purposes of this section, including relating to abusive basis adjustment practices..(b)(1)Section 1223(3) of the Internal Revenue Code of 1986 is amended—(A)by striking stock or securities
the first place it appears and inserting specified assets (as defined in section 1091(g))
,(B)by striking stock or securities
the second and third place it appears and inserting specified assets (as so defined)
, and(C)by striking (or the contract or option to acquire which)
and inserting (or the entering into of a contract or option to acquire or notional principal contract in respect of which)
.(2)Section 6045(g)(2)(B) of such Code is amended—(A)in clause (i)(I)—(i)by striking security (other than stock
and inserting covered security (other than stock
, and(ii)by striking stock sold or transferred
and inserting covered security sold or transferred
, and(B)in clause (ii)—(i)by striking stock or securities
and inserting specified assets
, and(ii)by striking identical securities
and inserting identical specified assets (as defined in section 1091(g))
.(3)The table of sections for part VII of subchapter O of chapter 1 fo such Code is amended by striking the item relating to section 1091 and inserting the following new item:Sec. 1091. Loss from wash sales of specified assets.
.(c)The amendments made by this section shall be repealed on December 31, 2035.(d)The amendments made by this section shall apply to sales, dispositions, and terminations in taxable years beginning after December 31, 2025.5.(a)Section 475 of the Internal Revenue Code of 1986 is amended—(1)by redesignating subsection (g) as subsection (h), and(2)by inserting after subsection (f) the following new subsection: (g) Election of mark To market for dealers and traders in specified assets (1) Dealer in specified assets (A) In the case of a dealer in specified assets who elects the application of this paragraph, this section shall apply to such assets held by such dealer in the same manner as this section applies to securities held by a dealer in securities.
(B)
An election under subparagraph (A) may be made without the consent of the Secretary. An election, once made, shall apply to the taxable year for which made and all subsequent taxable years unless revoked with the consent of the Secretary.
(2)
Trader in specified assets
In the case of a person who is engaged in a trade or business as a trader in specified assets and who elects to have this paragraph apply to such trade or business as a trader in such assets, subsection (f)(1) shall apply to specified assets held by the trader in connection with such trade or business in the same manner as such subsection applies to securities held by a trader in securities.
(3)
The application of this subsection shall be limited to specified assets which are treated as actively traded.
(4)
For purposes of this subsection— (A) The term specified asset means—
(i)
a digital asset, (ii) any notional principal contract with respect to a digital asset described in clause (i), or
(iii)
any evidence of an interest in, or a derivative instrument in, an asset described in clause (i) or (ii), including any option, forward contract, futures contract, short position, or similar instrument in such digital asset.
(B)
Dealer in specified assets
The term dealer in specified assets means a taxpayer which—
(i)
regularly purchases specified assets from, or sells specified assets to, customers in the ordinary course of a trade or business, or
(ii)
regularly offers to enter into, assume offset, assign, or otherwise terminate positions in specified assets with customers in the ordinary course of a trade or business.
(5)
The Secretary may prescribe such regulations or other guidance as may be necessary to carry out the purposes of this subsection.
(6)
This subsection shall not apply to taxable years beginning after December 31, 2035.
.(b)The amendments made by this section shall apply to sales and exchanges in taxable years beginning after the date of enactment of this Act.6.Digital asset mining and staking(a)Section 451 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:(l)Deferral of income recognition for digital asset activities(1)In the case of a taxpayer who engages in validation of digital asset transactions (including digital asset mining and staking), any income relating to such activities—(A)shall not be included in the gross income of the taxpayer until the taxable year of the sale or other disposition of the assets produced or received in connection with the mining or staking activities, and(B)shall be treated as ordinary income.(2)The Secretary may prescribe such regulations or other guidance as may be necessary to carry out the purposes of this subsection, including relating to the residence of a recipient of a digital asset fork or digital asset airdrop.(3)This subsection shall not apply to taxable years beginning after December 31, 2035..(b)Source of income related to consideration receivedSection 863 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:(f)Source of income related to consideration received(1)The source of any income related to validation of digital asset transactions shall be determined by reference to the residence of the recipient at the time of receipt.(2)The Secretary may prescribe such regulations or other guidance as may be necessary to carry out the purposes of this subsection.(3)This subsection shall not apply to taxable years beginning after December 31, 2035..(c)The amendments made by this section shall apply to taxable years beginning after the date of enactment of this Act.7.Charitable contributions and qualified appraisals(a)Section 170(f)(11)(A)(ii)(I) of the Internal Revenue Code of 1986 is amended by inserting actively traded digital assets,
before and any qualified vehicle
.(b)Contributions to private foundationSection 170(e)(5) of the Internal Revenue Code of 1986 is amended—(1)in the heading, by inserting or digital assets
after stock
,(2)in subparagraph (A), by inserting or qualified appreciated digital assets
after qualified appreciated stock
, and(3)by adding at the end the following new subparagraph:(D)Qualified appreciated digital asset(i)For purposes of this paragraph, the term qualified appreciated digital asset means a digital asset—(I)which is actively traded, and(II)which is capital gain property (as defined in subsection (b)(1)(C)(iv)).(ii)The Secretary may prescribe such regulations or other guidance as may be necessary to carry out the purposes of this subparagraph.(iii)The term qualified appreciated digital asset shall not apply to any contribution made in taxable years beginning after December 31, 2035..(c)The amendments made by this section shall apply to contributions made in taxable years beginning after the date of enactment of this Act.