[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 10357 Introduced in House (IH)]
<DOC>
119th CONGRESS
2d Session
H. R. 10357
To amend the Internal Revenue Code of 1986 to reform the tax treatment
of digital assets, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 14, 2026
Mr. Smith of Missouri (for himself, Mr. Arrington, Mr. Bean of Florida,
Mr. Carey, Mr. Horsford, Mr. Kelly of Pennsylvania, Mr. Kustoff, Mr.
Miller of Ohio, and Mr. Yakym) introduced the following bill; which was
referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to reform the tax treatment
of digital assets, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) Short Title.--This Act may be cited as the ``Digital Asset Tax
Certainty Act''.
(b) References.--Except as otherwise expressly provided, whenever
in this Act an amendment or repeal is expressed in terms of an
amendment to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provision of the
Internal Revenue Code of 1986.
(c) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; etc.
TITLE I--REMOVING TAX BARRIERS TO THE USE OF DIGITAL ASSETS AS A MEDIUM
OF EXCHANGE
Sec. 101. Treatment of de minimis digital asset fees.
Sec. 102. Simplified accounting for gain and loss on widely traded
digital assets.
Sec. 103. Treatment of U.S. dollar stablecoin transactions.
TITLE II--PROVIDING PARITY BETWEEN DIGITAL ASSETS AND COMPARABLE
TRADITIONAL FINANCIAL ASSETS
Sec. 201. Transfers of traded digital assets pursuant to a lending
agreement.
Sec. 202. Dealers and traders of widely traded digital assets.
Sec. 203. Digital asset trading safe harbor.
Sec. 204. Charitable contributions of certain digital assets.
TITLE III--APPLYING EXISTING TAX ANTI-ABUSE RULES TO DIGITAL ASSETS
Sec. 301. Application of wash sale rules to traded digital assets.
Sec. 302. Application of constructive sale rules to digital assets.
Sec. 303. Application of subpart F and PFIC rules.
Sec. 304. Rules related to possessions for determining source of gain
or loss on disposition of traded digital
assets.
Sec. 305. Application of registration-required obligation rules.
Sec. 306. Certain rules related to character of gains and losses
relating to digital assets.
Sec. 307. Miscellaneous provisions.
TITLE IV--CLARIFYING THE TAX TREATMENT OF MINING AND STAKING
Sec. 401. Source and character of mining and staking income.
Sec. 402. Investment trusts engaged in digital asset staking.
TITLE V--ENSURING THAT OWNERS AND USERS OF DIGITAL ASSETS FACE AN
APPROPRIATE TAX COMPLIANCE BURDEN
Sec. 501. Broker requirements.
Sec. 502. Establishment of Digital Asset Voluntary Disclosure Program.
Sec. 503. Treasury study and report.
TITLE VI--DEFINITIONS; REGULATIONS; RULES OF CONSTRUCTION
Sec. 601. Definitions.
Sec. 602. Regulations.
Sec. 603. Rules of construction.
TITLE VII--FULL HOUSE ACT
Sec. 701. Reinstatement of rules for wagering losses.
(d) Cross Reference to Defined Terms Related to Digital Assets.--
For definitions of certain terms related to digital assets used in the
amendments made by this Act to the Internal Revenue Code of 1986, see
the amendments made by section 601 of this Act.
TITLE I--REMOVING TAX BARRIERS TO THE USE OF DIGITAL ASSETS AS A MEDIUM
OF EXCHANGE
SEC. 101. TREATMENT OF DE MINIMIS DIGITAL ASSET FEES.
(a) In General.--Part III of subchapter O of chapter 1 of subtitle
A is amended by inserting after section 1043 the following new section:
``SEC. 1044. DE MINIMIS DIGITAL ASSET FEE EXCEPTION.
``(a) In General.--No gain or loss shall be recognized on the
disposition of a digital asset in payment of--
``(1) a de minimis network fee, or
``(2) a de minimis transaction fee.
``(b) De Minimis Network Fee.--For purposes of this section--
``(1) In general.--The term `de minimis network fee' means
an amount paid or incurred in a digital asset transaction to
validate another digital asset transaction if the aggregate
amount so paid or incurred with respect to the validation of
such other digital asset transaction does not exceed $10.
``(2) Network fee.--The term `network fee' means any amount
which would be a de minimis network fee if paragraph (1) were
applied without regard to the dollar limitation specified
therein.
``(c) De Minimis Transaction Fee.--For purposes of this section--
``(1) In general.--The term `de minimis transaction fee'
means an amount (other than a network fee) paid or incurred as
a brokerage fee, trading fee, liquidity fee, or similar fee, to
facilitate a transfer of a digital asset (hereafter referred to
as the `underlying digital asset transfer') if--
``(A) the digital asset disposed of in payment of
such fee is a digital asset of the same type as the
type of digital asset disposed of or acquired by the
taxpayer in the underlying digital asset transfer, and
``(B) the aggregate of such amounts with respect to
such underlying digital asset transfer does not exceed
$10.
``(2) Transaction fee.--The term `transaction fee' means
any amount which would be a de minimis transaction fee if
paragraph (1) were applied without regard to the dollar
limitation specified therein.
``(3) Type of digital asset.--A type of digital asset shall
be determined under rules similar to the rules of section
1051(b)(2).
``(d) Disposition of Digital Asset Used to Pay Network or
Transaction Fee.--For purposes of this title, any payment of a network
fee or transaction fee using a digital asset shall be treated as a
disposition of such asset in exchange for consideration equal to the
fair market value of such asset (and, in the case of a network fee,
shall not fail to be treated as such a payment merely because such
asset is not acquired by another person).
``(e) Treatment of Unrecognized Gain or Loss.--The amount of any
network fee or transaction fee that is taken into account in
determining the amount of gain or loss on the disposition of any asset,
in determining the amount of any deduction, or in determining the basis
of any asset acquired, shall be reduced by the amount of any gain, or
increased by the amount of any loss, not recognized by reason of
subsection (a) with respect to the disposition of the digital asset
used to pay such network fee or transaction fee.
``(f) Exclusions.--
``(1) Trade or business.--
``(A) In general.--Subsection (a) shall not apply
to the disposition of a digital asset by--
``(i) a trader, broker, or dealer in
digital assets,
``(ii) a person in the trade or business of
batching or facilitating the validation of
digital asset transactions on behalf of others,
``(iii) to the extent provided by the
Secretary, any person in a trade or business
which is substantially similar to a trade or
business described in clause (i) or (ii), or
``(iv) any person that engaged in more than
5,000 transfers of digital assets during the
preceding taxable year (determined without
regard to any transfer made in payment of a de
minimis network fee or a de minimis transaction
fee).
``(B) Administrative convenience exception.--
``(i) In general.--Subparagraph (A) shall
not apply to any taxpayer that demonstrates to
the Secretary that such taxpayer is of a type
with respect to which not applying subparagraph
(A) will not result in a substantial Federal
revenue loss.
``(ii) Guidance.--The Secretary shall issue
regulations or other guidance that--
``(I) identifies different types of
taxpayers with respect to which not
applying subparagraph (A) will not
result in substantial Federal revenue
loss, and
``(II) specifies with respect to
each such type of taxpayer the
information that such taxpayer must
provide to make the demonstration
described in clause (i).
``(iii) Certain factors required to be
taken into account.--The regulations or other
guidance issued by the Secretary under clause
(ii) shall--
``(I) for purposes of determining
the classification of types of
taxpayers, and whether any Federal
revenue loss from not applying
subparagraph (A) with respect to any
such type of taxpayer would be
substantial, take into account the
method or methods used by such type of
taxpayer for selecting the digital
assets used to pay network and
transaction fees and the average
holding period of such digital assets
by such type of taxpayer, and
``(II) determine Federal revenue
loss by reducing such loss by a
reasonable approximation of the
additional administrative costs of the
Department of the Treasury, and the
additional compliance costs of such
type of taxpayer (and any person who
would be required to make additional
information return reporting with
respect to such type of taxpayer),
which would be imposed if subparagraph
(A) were to apply to such type of
taxpayer.
``(2) Certain accounting methods.--Subsection (a) shall not
apply to any digital asset--
``(A) to which subsection (a), (e), (f), or (g) of
section 475, section 1051(a), or section 1256(a)
applies, or
``(B) except as otherwise provided by the
Secretary, to which a mark-to-market method applies
under any other provision of this subtitle.
``(g) Regulations.--The Secretary shall issue such regulations or
other guidance as may be necessary or appropriate to carry out the
purposes of this section, including regulations or guidance to prevent
the abuse of this section through--
``(1) transaction structuring for the purpose of qualifying
for the exclusion provided in subsection (a), and
``(2) the receipt of any value in exchange for a network
fee or transaction fee other than--
``(A) in the case of a network fee, the validation
of a digital asset transaction, or
``(B) in the case of a transaction fee, the
brokerage, trading, liquidity, or similar digital asset
transfer service.''.
(b) Clerical Amendment.--The table of sections for part III of
subchapter O of chapter 1 of subtitle A is amended by inserting after
the item relating to section 1043 the following new item:
``Sec. 1044. De minimis digital asset fee exception.''.
(c) Effective Date.--The amendments made by this section shall
apply to the disposition of assets after December 31, 2027.
SEC. 102. SIMPLIFIED ACCOUNTING FOR GAIN AND LOSS ON WIDELY TRADED
DIGITAL ASSETS.
(a) In General.--Part IV of subchapter O of chapter 1 of subtitle A
is amended by inserting before section 1052 the following new section:
``SEC. 1051. ELECTION TO APPLY SIMPLIFIED ACCOUNTING FOR GAIN AND LOSS
ON WIDELY TRADED DIGITAL ASSETS.
``(a) In General.--In the case of any designated type of digital
asset with respect to any taxpayer for any taxable year--
``(1) such taxpayer shall recognize gain on such designated
type of digital asset for such taxable year equal to the excess
(if any) of--
``(A) the sum of--
``(i) the aggregate amount realized by the
taxpayer on sales or exchanges (including
nonrecognition transactions) of widely traded
digital assets of such designated type during
such taxable year,
``(ii) in the case of dispositions
(including nonrecognition transactions), other
than sales or exchanges described in clause
(i), of widely traded digital assets of such
designated type, the fair market value of such
widely traded digital assets (determined as of
the time of such dispositions), and
``(iii) the fair market value of widely
traded digital assets of such designated type
held by such taxpayer as of the close of the
taxable year, over
``(B) the sum of--
``(i) the fair market value of
consideration provided by the taxpayer for the
acquisition of widely traded digital assets of
such designated type during the taxable year
(other than any portion of such acquisition to
which clause (iii) applies),
``(ii) in the case of any disposition
described in subparagraph (A)(ii), any amounts
which would have reduced the amount realized by
the taxpayer on such disposition if such
disposition had been a sale or exchange,
``(iii) in the case of the acquisition of
widely traded digital assets of such designated
type during the taxable year the basis of which
in the hands of the taxpayer is determined by
reference to the basis of such assets in the
hands of the transferor, the basis of such
assets in the hands of the taxpayer immediately
after such acquisition,
``(iv) in the case of any adjustment to the
basis of a widely traded digital asset of such
designated type (including adjustments under
sections 734(b) and 743(b)), the net dollar
amount (positive or negative) of any adjustment
to basis of such widely traded digital asset,
and
``(v) the fair market value of widely
traded digital assets of such designated type
held by such taxpayer as of the close of the
preceding taxable year,
``(2) such taxpayer shall recognize loss on such designated
type of digital asset for such taxable year equal to the excess
(if any) of--
``(A) the amount described in paragraph (1)(B),
over
``(B) the amount described in paragraph (1)(A), and
``(3) except as provided in paragraphs (1) and (2), such
taxpayer shall not recognize any gain or loss on the
disposition of widely traded digital assets of such designated
type.
``(b) Designated Type of Digital Asset.--For purposes of this
section--
``(1) In general.--The term `designated type of digital
asset' means, with respect to any taxpayer for any taxable
year, any type of widely traded digital asset (other than any
qualified U.S. dollar stablecoin) with respect to which such
taxpayer elects the application of this section for such
taxable year.
``(2) Type of widely traded digital asset.--Widely traded
digital assets shall be treated as being of the same type if,
and only if--
``(A) such assets are fungible, or
``(B) such assets are determined under rules
provided by the Secretary to have values that are
directly linked or highly correlated.
``(3) Pool token assets.--
``(A) In general.--For purposes of this section,
qualified pool token assets shall be treated as widely
traded digital assets, but shall be treated as widely
traded digital assets with respect to any taxpayer if,
and only if--
``(i) not more than 10 percent of such
tokens are owned, directly or indirectly, by
the taxpayer or any person described with
respect to the taxpayer under section 267(b)
(applied without regard to section 267(c)(3))
or section 707(b)(1), and
``(ii) the taxpayer and such persons do not
have control or effective management of the
composition of the assets to which the value of
such tokens is attributable, including in a
manner similar to a manager, sponsor, director,
shareholder, general partner, commonly
controlled affiliate, or other similar role.
``(B) Qualified pool token asset.--For purposes of
this subsection, the term `qualified pool token asset'
means any type of digital asset (determined under
paragraph (2) by substituting `digital assets' for
`widely traded digital assets') for any taxable year
if--
``(i) at substantially all times during the
calendar year which ends in or with the taxable
year preceding such taxable year--
``(I) substantially all of the
value of such type of digital asset is
attributable to widely traded digital
assets (determined after the
application of subparagraph (A)), and
``(II) such type of digital asset
is redeemable on demand for a
proportionate share of the assets to
which the value of such digital asset
is attributable, and
``(ii) the Secretary has determined that
allowing such type of digital asset to be
treated as a widely traded digital asset for
purposes of this section is consistent with
efficient tax administration and not subject to
abuse.
``(C) Prevention of double counting.--In the case
of any designated type of qualified pool token assets
with respect to any taxpayer, such taxpayer shall not
recognize gain or loss with respect to the particular
assets to which the value of such designated type of
qualified pool token assets is attributable.
``(c) Gain or Loss Treated as Short-term.--Any gain or loss
determined under subsection (a) shall be treated as short-term capital
gain or short-term capital loss, respectively.
``(d) Treatment of Lending Transactions.--
``(1) Certain lending agreements.--In the case of any
transfer of widely traded digital assets to which section
1058(a) applies, such assets shall be treated for purposes of
this section as continuing to be held by the transferor.
``(2) Other lending transactions.--In the case of any loan
of widely traded digital assets which is not described in
paragraph (1), except as otherwise provided by the Secretary,
such assets shall be treated for purposes of this section as
continuing to be held by the lender.
``(e) Election.--
``(1) Application of election.--
``(A) In general.--An election under this section
with respect to any designated type of digital asset
shall apply to the first taxable year which begins
after the date on which the taxpayer makes such
election and to each taxable year thereafter unless
revoked as provided in paragraph (5).
``(B) Application to current taxable year.--If the
taxpayer has not held any unit of a designated type of
digital asset at any time during the 2-year period
ending on the date on which the taxpayer makes the
election described in subparagraph (A) with respect to
such designated type of digital asset, such taxpayer
may elect to apply subparagraph (A) by substituting
`the taxable year in which' for `the first taxable year
which begins after the date on which'.
``(2) Partnerships and s corporations.--In the case of any
partnership or S corporation, the election under this section
shall be made at the partnership or S corporation level.
``(3) Exclusion of dealers eligible to make mark-to-market
election.--A dealer that is eligible to make an election under
section 475(g) with respect to any taxable year may not make an
election under this section with respect to such taxable year.
``(4) Exclusion of traders with a mark-to-market election
in effect.--A trader which has an election in effect under
section 475(f)(3) with respect to any taxable year may not make
an election under this section with respect to such taxable
year.
``(5) Revocation.--
``(A) In general.--A taxpayer may revoke an
election under this section with respect to a taxable
year which--
``(i) has not begun as of the date on which
such taxpayer requests such revocation, and
``(ii) is not one of the first 5 taxable
years to which such election applies.
``(B) Deemed revocation.--In the case of any
designated type of digital asset which has ceased to be
a widely traded digital asset, the election under this
section with respect to such designated type shall be
treated as revoked with respect to the first taxable
year beginning after the date on which such designated
type ceases to be a widely traded digital asset.
``(C) 5-year waiting period.--In the case of any
revocation under this paragraph with respect to any
designated type of digital asset, the taxpayer may not
make an election under this section with respect to
such designated type if such election would apply to
any of the first 5 taxable years to which such
revocation applies.
``(D) Special rule for traders making mark-to-
market election.--If a taxpayer has in effect one or
more elections under this section and such taxpayer
makes the election under section 475(f)(3) with respect
to any taxable year, the taxpayer shall
(notwithstanding subparagraph (A)) be treated as
revoking all such elections under this section
beginning with such taxable year.
``(f) Special Rules Related to Election, Revocation, and Certain
Transfers.--
``(1) Treatment of assets upon election.--In the case of an
election under this section, with respect to any designated
type of digital asset, any widely traded digital assets of such
designated type held by the taxpayer shall be treated as sold
for fair market value on the last day of the taxable year
preceding the first taxable year to which such election
applies.
``(2) Adjustments upon revocation.--In the case of a
revocation of an election under this section, proper
adjustments shall be made in the amount of any gain or loss
subsequently realized for gain or loss taken into account under
subsection (a).
``(3) Certain transfers.--In the case of any transfer of a
widely traded digital asset which is a designated type of
digital asset with respect to the transferor for the taxable
year in which the transfer occurs, if the basis of such asset
in the hands of the transferee is determined by reference to
the basis of such asset in the hands of the transferor, the
basis of such asset in the hands of the transferor (solely for
purposes of determining the basis of such asset in the hands of
the transferee) shall be treated as being equal to the fair
market value of such asset at the time of such transfer.
``(g) Special Rules Related to Partnerships.--
``(1) Sale or exchange of interest in partnership.--The
amount of any money, or the fair market value of any property,
received by a transferor partner in exchange for all or a part
of such partner's interest in the partnership attributable to a
designated type of digital asset of the partnership shall be
considered as an amount realized from the sale or exchange of a
capital asset held for less than 1 year (under rules similar to
the rules that apply for purposes of section 751(a)), by
treating such designated type of digital asset in the same
manner as an unrealized receivable.
``(2) Certain distributions treated as sales or
exchanges.--In the case of any designated type of digital asset
of a partnership, rules similar to the rules of section 751(b)
shall apply by treating such designated type of digital asset
in the same manner as an unrealized receivable and by treating
any resulting gain or loss as short-term capital gain or short-
term capital loss.
``(3) Allocations of basis.--For purposes of any allocation
of basis to a designated type of digital asset of a
partnership, rules similar to the rules for allocating basis to
unrealized receivables (including sections 755 and 732(c))
shall apply except that proper adjustments shall be made to
treat the designated type of digital asset as a capital asset
held for less than 1 year.
``(4) Certain contributions to partnership.--
``(A) In general.--Except to the extent otherwise
provided by the Secretary, in the case of a
contribution of any widely traded digital asset to a
partnership by a partner in a contribution to which
section 721 applies in a taxable year of the
partnership for which such widely traded digital asset
is a designated type of digital asset with respect to
such partnership, any gain or loss recognized by the
partnership under this section with respect to such
designated type of widely traded digital asset shall be
allocated to the contributing partner to the extent of
the built-in gain or built-in loss (as the case may be)
of the widely traded digital asset so contributed.
``(B) Built-in gain.--For purposes of this
paragraph, the term `built-in gain' means the excess
(if any) of the fair market value of the property at
the time of contribution over the adjusted basis of
such property (in the hands of the partner) at such
time.
``(C) Built-in loss.--For purposes of this
paragraph, the term `built-in loss' means the excess
(if any) of the adjusted basis of the property (in the
hands of the partner) at the time of contribution over
the fair market value of such property at such time.
``(h) Coordination With Certain Other Provisions.--
``(1) Determined without regard to wash and constructive
sale rules.--Sections 1091 and 1259 shall not apply to any
transaction with respect to which gain or loss is not
recognized by reason of subsection (a)(3).
``(2) Coordination with related party transaction rules.--
Section 267 shall not apply with respect to a sale or exchange
of property if the transferor has an election in effect under
this section for the taxable year with respect to such
property.
``(i) Clarification That Certain Transfers Are Treated as
Dispositions.--The following shall not fail to be treated as a
disposition for purposes of this section:
``(1) The distribution of any digital asset from a trust to
a beneficiary.
``(2) The transfer of any digital asset from a decedent
(whether or not incident to the decedent's death).
``(j) Regulatory Authority.--The Secretary shall prescribe such
regulations or other guidance as may be necessary or appropriate to
carry out the purposes of this section, including regulations or
guidance relating to--
``(1) the form and manner of making an election or
revocation under this section,
``(2) adjustments necessary by reason of such election or
revocation (including adjustments to basis of widely traded
digital assets of a designated type),
``(3) adjustments to reporting requirements relating to
widely traded digital assets with respect to which an election
is in effect under this section,
``(4) the treatment of a derivative of a designated type of
digital asset, and
``(5) preventing abuse of this section.''.
(b) Clerical Amendment.--The table of sections for part IV of
subchapter O of chapter 1 of subtitle A is amended by inserting before
the item relating to section 1052 the following new item:
``Sec. 1051. Election to apply simplified accounting for gain and loss
on widely traded digital assets.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2027.
SEC. 103. TREATMENT OF U.S. DOLLAR STABLECOIN TRANSACTIONS.
(a) In General.--Part IV of subchapter O of chapter 1 of subtitle A
is amended by redesignating section 1063 as section 1064 and by
inserting after section 1062 the following new section:
``SEC. 1063. CERTAIN U.S. DOLLAR STABLECOIN TRANSACTIONS.
``(a) Treatment of Acquisitions of U.S. Dollar Stablecoins.--
``(1) Determination of basis.--The basis of any qualified
U.S. dollar stablecoin acquired by a taxpayer in any sale or
exchange shall be the redemption value of such stablecoin. The
preceding sentence shall not apply if it is unreasonable under
the facts and circumstances to conclude that the value of the
consideration provided for such stablecoin in such sale or
exchange is not less than 99.5 percent of such redemption
value.
``(2) Treatment of consideration provided in exchange.--For
purposes of this title, in the case of any consideration other
than money provided in exchange for a qualified U.S. dollar
stablecoin, the income, gain, or loss resulting from the
provision of such consideration shall be determined by treating
the value of such qualified U.S. dollar stablecoin as being
equal to the redemption value of such stablecoin. The preceding
sentence shall not apply if it is unreasonable under the facts
and circumstances to conclude that the value of such stablecoin
is not less than 99.5 percent, and not more than 100.5 percent,
of such redemption value.
``(b) Treatment of Sale or Exchange of Qualified U.S. Dollar
Stablecoins.--
``(1) Determination of gain or loss.--If the taxpayer's
basis in any qualified U.S. dollar stablecoin was determined
under subsection (a)(1), gain or loss on such taxpayer's sale
or exchange of such stablecoin shall be determined as though
such stablecoin were sold or exchanged for the redemption value
of such stablecoin. The preceding sentence shall not apply if
it is unreasonable under the facts and circumstances to
conclude that the value of the consideration received for such
stablecoin in such sale or exchange is not more than 100.5
percent of such redemption value.
``(2) Treatment of consideration received in exchange.--For
purposes of this title, in the case of any consideration other
than money received in exchange for a qualified U.S. dollar
stablecoin, the cost of (and amount paid or incurred for) such
consideration shall be determined by treating the value of such
qualified U.S. dollar stablecoin as being equal to the
redemption value of such stablecoin. The preceding sentence
shall not apply if it is unreasonable under the facts and
circumstances to conclude that the value of such stablecoin is
not less than 99.5 percent, and not more than 100.5 percent, of
such redemption value.
``(c) Exceptions.--
``(1) In general.--Subsections (a) and (b) shall not apply
with respect to any taxpayer for any taxable year if such
taxpayer is--
``(A) a trader, broker, or dealer in qualified U.S.
dollar stablecoins,
``(B) to the extent provided by the Secretary, any
person in a trade or business which is substantially
similar to a trade or business described in
subparagraph (A), or
``(C) any other person who in the preceding taxable
year engaged in more than 5,000 transactions to which
subsection (a) or (b) applied, determined without
regard to--
``(i) any such transaction which is with
respect to a trade or business (other than a
trade or business described in subparagraph (A)
or (B)), including the acceptance of qualified
U.S. dollar stablecoins at redemption value as
a payment for goods or services in such trade
or business and the use of qualified U.S.
dollar stablecoins at redemption value to
acquire goods and services for use in such
trade or business, and
``(ii) any such transaction which is a sale
(for money) of a qualified U.S. dollar
stablecoin at or below redemption value.
``(2) Functional currency other than the dollar.--
Subsections (a) and (b) shall not apply to any taxpayer or
qualified business unit (as defined in section 989(a)) that
uses a functional currency other than the dollar.
``(3) Related parties.--In the case of any sale or exchange
between persons described in section 267(b) (applied without
regard to section 267(c)(3)) or section 707(b)(1)--
``(A) subsections (a)(1), (a)(2), and (b)(2) shall
be applied by substituting `100 percent' for `99.5
percent', and
``(B) subsections (a)(2), (b)(1), and (b)(2) shall
be applied by substituting `100 percent' for `100.5
percent'.
``(d) Redemption Value.--For purposes of this section, the term
`redemption value' means, with respect to a qualified U.S. dollar
stablecoin, the dollar amount for which the issuer is obligated to
convert, redeem, or repurchase such stablecoin.
``(e) Regulations.--The Secretary shall issue such regulations or
other guidance as may be necessary or appropriate to carry out the
purposes of this section, including regulations or other guidance--
``(1) describing the factors considered, and documentation
or substantiation required, with respect to the facts and
circumstances tests described in subsections (a)(1), (a)(2),
(b)(1), and (b)(2),
``(2) providing for the application of subsection (c)(1)
with respect to a portion of a taxable year if the taxpayer
only regularly purchases, exchanges, or sells qualified U.S.
dollar stablecoins for profit for a portion of such taxable
year, and
``(3) to prevent abuse of this section.''.
(b) Clerical Amendment.--The table of sections for part IV of
subchapter O of chapter 1 of subtitle A is amended by redesignating the
item relating to section 1063 as an item relating to section 1064 and
by inserting after the item relating to section 1062 the following new
item:
``Sec. 1063. Certain U.S. dollar stablecoin transactions.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2026.
(d) Transition Rules.--The Secretary of the Treasury, or the
Secretary's delegate, shall, consistent with the purposes of section
1063 of the Internal Revenue Code of 1986, provide temporary rules for
taxpayers addressing periods prior to the issuance of final regulations
or guidance under section 1063(e) of such Code.
TITLE II--PROVIDING PARITY BETWEEN DIGITAL ASSETS AND COMPARABLE
TRADITIONAL FINANCIAL ASSETS
SEC. 201. TRANSFERS OF TRADED DIGITAL ASSETS PURSUANT TO A LENDING
AGREEMENT.
(a) In General.--Subsections (a) and (b) of section 1058 are each
amended by striking ``securities'' each place it appears and inserting
``specified assets''.
(b) Specified Assets.--Section 1058 is amended by adding at the end
the following new subsection:
``(d) Specified Assets.--For purposes of this section, the term
`specified assets' means--
``(1) securities (as defined in section 1236(c)), and
``(2) traded digital assets.''.
(c) Treatment of Certain Legal Entitlements and Obligations Which
Accrue During Period of Agreement.--Section 1058(b)(2), as amended by
subsection (a), is amended--
(1) by striking ``require that payments'' and inserting
``require that--
``(A) payments'',
(2) by inserting ``and'' after ``transferor;'', and
(3) by adding at the end the following new subparagraph:
``(B) in the case of any transfer of traded digital
assets--
``(i) payments shall be made to the
transferor of amounts equivalent to, except as
otherwise provided by the Secretary, all
property and other legal entitlements which the
owner of the traded digital assets is entitled
to receive during the period described in
subparagraph (A), and
``(ii) the transferor shall assume all
obligations imposed on the owner of such traded
digital assets during the period described in
subparagraph (A);''.
(d) Conforming Amendments.--
(1) Section 1058(a) is amended by striking ``(as defined in
section 1236(c))''.
(2) The heading of section 1058, and the item relating to
section 1058 in the table of sections for part IV of subchapter
O of chapter 1, are each amended by striking ``securities'' and
inserting ``specified assets''.
(e) Effective Date.--The amendments made by this section shall
apply to transfers made after the date of the enactment of this Act.
SEC. 202. DEALERS AND TRADERS OF WIDELY TRADED DIGITAL ASSETS.
(a) In General.--Section 475 is amended by redesignating subsection
(g) as subsection (h) and by inserting after subsection (f) the
following new subsection:
``(g) Election of Mark to Market for Dealers in Covered Digital
Assets.--
``(1) In general.--In the case of a dealer in covered
digital assets who elects the application of this subsection,
this section shall apply to covered digital assets held by such
dealer in the same manner as this section applies to securities
held by a dealer in securities.
``(2) Covered digital asset.--For purposes of this section,
the term `covered digital asset' means--
``(A) any specified traded digital asset,
``(B) any notional principal contract with respect
to any specified traded digital asset,
``(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, and
``(D) any position which--
``(i) is not a covered digital asset
described in subparagraph (A), (B), or (C),
``(ii) is a hedge with respect to such a
covered digital asset, and
``(iii) is clearly identified in the
taxpayer's records as being described in this
subparagraph before the close of the day on
which it was acquired or entered into (or such
other time as the Secretary may by regulations
prescribe).
``(3) Specified traded digital asset.--For purposes of
paragraph (2)--
``(A) In general.--The term `specified traded
digital asset' means--
``(i) any widely traded digital asset,
``(ii) any qualified U.S. dollar
stablecoin,
``(iii) any qualified pool token asset (as
defined in section 1051(b)(3)(B)),
``(iv) any traded digital asset which--
``(I) would be a widely traded
digital asset but for the requirement
of clause (ii) of section
7701(p)(3)(A), and
``(II) has an average daily trading
volume, determined on the basis of
business days during the calendar year
that ends in or with the preceding
taxable year, that exceeds $5,000,000,
or
``(v) any traded digital asset which--
``(I) would be a widely traded
digital asset but for the requirement
of clause (iii) of section
7701(p)(3)(A), and
``(II) constitutes the principal
asset held by an entity that is not
registered under the Investment Company
Act of 1940 and the securities of which
are listed and traded on a national
securities exchange registered under
section 6 of the Securities and
Exchange Act of 1934.
``(B) Limited continued treatment.--In the case of
any taxpayer for any taxable year, the term `specified
traded digital asset' also includes any traded digital
asset that would be a widely traded digital asset but
for the requirement of clause (ii) of section
7701(p)(3)(A) if, with respect to one or more of the 3
preceding taxable years--
``(i) such traded digital asset was a
specified traded digital asset described in
clause (i) or (ii) of subparagraph (A) with
respect to such taxable year,
``(ii) the taxpayer had an election in
effect under this subsection that applied to
such taxable year and each intervening taxable
year, and
``(iii) the taxpayer held specified traded
digital assets of such type (determined under
rules similar to the rules of section
1051(b)(2)), or covered digital assets
described in subparagraph (B), (C), or (D) of
paragraph (2) with respect to such type of
specified traded digital asset, to which
paragraph (1) applied for such taxable year.
``(4) Election.--An election under this subsection may be
made without the consent of the Secretary. Such 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.''.
(b) Application of Mark to Market Rules to Covered Digital
Assets.--Section 475(f) is amended--
(1) in the heading, by striking ``or Commodities'' and
inserting ``, Commodities, or Covered Digital Assets'',
(2) by redesignating paragraph (3) as paragraph (4) and by
inserting after paragraph (2) the following new paragraph:
``(3) Traders in covered digital assets.--In the case of a
person who is engaged in a trade or business as a trader in
covered digital assets and who elects to have this paragraph
apply to such trade or business, paragraph (1) shall apply to
covered digital assets held by such trader in connection with
such trade or business in the same manner as paragraph (1)
applies to securities held by a trader in securities.'', and
(3) in paragraph (4), as so redesignated, by striking
``paragraphs (1) and (2)'' and inserting ``paragraphs (1), (2),
and (3)''.
(c) Treatment of Covered Digital Assets Which Are Securities or
Commodities.--Section 475(d) is amended by adding at the end the
following new paragraph:
``(4) Treatment of covered digital assets which are
securities or commodities.--In the case of any covered digital
asset which is a security or commodity (determined without
regard to this paragraph), such covered digital asset shall not
be treated as a security or commodity for purposes of
subsections (b) through (g).''.
(d) Treatment of Adjustments Attributable to Election of Mark to
Market.--Section 475(d), as amended by subsection (c), is amended by
adding at the end the following new paragraph:
``(5) Adjustments attributable to mark to market treatment
of securities, commodities, or covered digital assets.--In the
case of an adjustment described in section 481(a) by reason of
the taxpayer's change to, or from, a method of accounting
provided in subsection (a), (e), (f), or (g) of this section,
the character of any income or loss with respect to any
property as a result of such adjustment shall be the same as
the character of the gain or loss which would have resulted
from the sale of such property as of the close of the taxable
year preceding the year of the change (within the meaning of
section 481) under the method of accounting used for such
preceding taxable year.''.
(e) Treatment as Specified Service Trade or Business.--Section
199A(d)(2)(B) is amended by striking ``or commodities (as defined in
section 475(e)(2))'' and inserting ``commodities (as defined in section
475(e)(2)), traded digital assets, or covered digital assets (as
defined in section 475(g)(2))''.
(f) Conforming Amendments.--
(1) Section 475(e)(2) is amended by striking ``this
subsection and subsection (f)'' and inserting ``this section''.
(2) The heading of section 475 is amended by striking
``dealers in securities'' and inserting ``certain dealers and
traders''.
(3) The table of sections for subpart D of part II of
subchapter E of chapter 1 is amended by striking the item
relating to section 475 and inserting the following:
``Sec. 475. Mark to market accounting method for certain dealers and
traders.''.
(g) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
(h) 4-year Spread of Adjustments.--In the case of a taxpayer that
elects under subsection (f)(3) or (g) of section 475 of the Internal
Revenue Code of 1986 (as added by this section) to change such
taxpayer's method of accounting for the taxpayer's first taxable year
beginning after the date of the enactment of this Act and before
January 1, 2028--
(1) any identification required with respect to such
subsection with respect to covered digital assets held on the
first day of such taxable year shall be treated as timely made
if made on or before the 30th day of such taxable year, and
(2) the net amount of the adjustments required to be taken
into account by the taxpayer under section 481 of such Code by
reason of such subsection shall be taken into account ratably
over the 4-taxable year period beginning with such taxable
year.
(i) Transitional Coordination With Wash Sale Rules.--
(1) In general.--In the case of a taxpayer that elects
under subsection (f)(3) or (g) of section 475 of the Internal
Revenue Code of 1986 (as added by this section) for the
taxpayer's first taxable year beginning after the date of the
enactment of this Act and before January 1, 2028, section 1091
shall be applied without regard to any specified transaction
made by the taxpayer during the preceding taxable year if the
taxpayer does not, during such first taxable year, identify
under section 475(b)(2) of such Code any built-in-gain security
as being described in subparagraph (A) of section 475(b)(1) of
such Code.
(2) Specified transaction.--For purposes of this
subsection, the term ``specified transaction'' means any
acquisition or disposition of a covered digital asset (as
defined in section 475(g) of such Code) made in the ordinary
course of the taxpayer's activity as a dealer or trader, as the
case may be.
(3) Built-in-gain security.--For purposes of this
subsection, the term ``built-in-gain security'' means any
security if (as of the time of the identification referred to
in paragraph (1)) the fair market value of such security
exceeds the adjusted basis of such security.
(j) Authority to Provide Additional Transition Rules.--The
Secretary of the Treasury, or the Secretary's delegate, may issue such
regulations or other guidance as may be necessary or appropriate to
provide additional transitional rules with respect to taxpayers that
make the election under subsection (f)(3) or (g) of section 475 of the
Internal Revenue Code of 1986 (as added by this section) for the
taxpayer's first taxable year beginning after the date of the enactment
of this Act and before January 1, 2028, including regulations or other
guidance to provide for simplified adjustments in the case of such an
election which will apply to digital assets to which an election under
section 475(e) of such Code applied for the preceding taxable year.
SEC. 203. DIGITAL ASSET TRADING SAFE HARBOR.
(a) In General.--Section 864(b)(2) is amended--
(1) in the heading, by striking ``or commodities'' and
inserting ``commodities, or traded digital assets'',
(2) by redesignating subparagraph (C) as subparagraph (D)
and by inserting the following new subparagraph after
subparagraph (B):
``(C) Traded digital assets.--
``(i) In general.--Trading in traded
digital assets through a resident broker,
commission agent, custodian, staking service
provider, or other independent agent.
``(ii) Trading for taxpayer's own
account.--Trading in traded digital assets for
the taxpayer's own account, whether by the
taxpayer or his employees or through a resident
broker, commission agent, custodian, staking
service provider, or other agent, and whether
or not any such employee or agent has
discretionary authority to make decisions in
effecting the transactions. This clause shall
not apply in the case of a dealer in digital
assets.
``(iii) Coordination with rules for
securities and commodities.--A traded digital
asset shall not be treated as a security or
commodity for purposes of this paragraph.'',
and
(3) in subparagraph (D), as so redesignated--
(A) by striking ``and (B)(i)'' and inserting ``,
(B)(i), and (C)(i)'', and
(B) by striking ``or in commodities'' and inserting
``in commodities, or in traded digital assets''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2025.
SEC. 204. CHARITABLE CONTRIBUTIONS OF CERTAIN DIGITAL ASSETS.
(a) Exception From Appraisal Requirement for Qualified U.S. Dollar
Stablecoins and Widely Traded Digital Assets.--Section
170(f)(11)(A)(ii)(I) is amended by inserting ``qualified U.S. dollar
stablecoins, widely traded digital assets (except as the Secretary
determines appropriate to prevent abuse of this section),'' after
``publicly traded securities (as defined in section 6050L(a)(2)(B)),''.
(b) Charitable Contributions of Digital Assets Other Than Qualified
U.S. Dollar Stablecoins, Widely Traded Digital Assets, and Tokenized
Digital Assets.--
(1) In general.--Section 170(f) is amended by adding at the
end the following new paragraph:
``(20) Contributions of conversion eligible digital
assets.--
``(A) In general.--No deduction shall be allowed
under subsection (a) for any contribution of a
conversion eligible digital asset (as defined in
section 1046(d)).
``(B) Cross reference.--For nonrecognition of gain
on certain sales and exchanges of conversion eligible
digital assets the proceeds of which are used to make
charitable contributions, see section 1046.''.
(2) Nonrecognition of gain on dispositions of conversion
eligible digital assets used to fund charitable
contributions.--Part III of subchapter O of chapter 1 is
amended by adding at the end the following new section:
``SEC. 1046. CERTAIN DISPOSITIONS OF CONVERSION ELIGIBLE DIGITAL ASSETS
USED TO FUND CHARITABLE CONTRIBUTIONS.
``(a) In General.--No gain shall be recognized on the sale of
conversion eligible digital assets (or the exchange of conversion
eligible digital assets for qualified U.S. dollar stablecoins) if all
of the gross receipts of such sale (or all of the qualified U.S. dollar
stablecoins received in such exchange) are contributed by the taxpayer
as a charitable contribution (as defined in section 170(c)) not later
than the earlier of--
``(1) the date that is 7 days after the date of such sale
or exchange, or
``(2) the close of the taxpayer's taxable year which
includes the date of such sale or exchange.
``(b) Contributions of Less Than Entire Proceeds.--Except as
otherwise provided by the Secretary, if less than all of the gross
receipts of a sale described in subsection (a) (or less than all the
qualified U.S. dollar stablecoins received in an exchange so described)
are contributed as described in subsection (a), so much of the gain on
such sale (or exchange) as bears the same ratio to such entire gain as
the amount so contributed bears to all of such gross receipts (or all
such U.S. dollar stablecoins) shall not be recognized.
``(c) Application of Certain Limitations on Deduction for
Charitable Contributions.--In the case of any charitable contribution
described in subsection (a) or (b)--
``(1) In general.--For purposes of subsections (b)(1)(G),
(b)(1)(I), and (p) of section 170, such contribution shall not
be treated as a contribution of cash.
``(2) Capital gain property.--For purposes of subsections
(b)(1)(C), (b)(1)(D), (b)(1)(I), and (e) of section 170, such
contribution shall be treated as a contribution made directly
by the taxpayer on the date of the sale or exchange referred to
in subsection (a) or (b) (as the case may be) of--
``(A) in the case of a sale or exchange referred to
in subsection (a), the conversion eligible digital
assets so sold or exchanged, and
``(B) in the case of a sale or exchange referred to
in subsection (b), the portion of the conversion
eligible digital assets so sold or exchanged that bears
the same ratio to such assets as the gain not
recognized under subsection (b) bears to the entire
gain referred to in such subsection.
``(d) Conversion Eligible Digital Assets.--For purposes of this
section, the term `conversion eligible digital asset' means any digital
asset other than--
``(1) a qualified U.S. dollar stablecoin,
``(2) a widely traded digital asset to which section
170(f)(11)(A)(ii)(I) applies, and
``(3) a tokenized digital asset.
``(e) Related Party Transactions.--This section shall not apply to
any sale or exchange between persons described in section 267(b)
(applied without regard to section 267(c)(3)) or section 707(b)(1).''.
(3) Clerical amendment.--The table of sections for part III
of subchapter O of chapter 1 is amended by adding at the end
the following new item:
``Sec. 1046. Certain dispositions of conversion eligible digital assets
used to fund charitable contributions.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2026.
TITLE III--APPLYING EXISTING TAX ANTI-ABUSE RULES TO DIGITAL ASSETS
SEC. 301. APPLICATION OF WASH SALE RULES TO TRADED DIGITAL ASSETS.
(a) In General.--Section 1091 is amended--
(1) by striking ``stock or securities'' each place it
appears and inserting ``specified assets'', and
(2) by striking ``shares of'' each place it appears.
(b) Specified Asset.--Section 1091 is amended by adding at the end
the following new subsection:
``(g) Specified Asset.--For purposes of this section--
``(1) In general.--The term `specified asset' means--
``(A) any stock or security, and
``(B) any traded digital asset other than a
qualified U.S. dollar stablecoin.
``(2) Contracts and options.--Except as otherwise provided
in regulations, the term `specified asset' includes any
contract or option to acquire or sell any specified asset
described in paragraph (1).
``(3) Treatment of tokenized digital assets as
substantially identical to an economically equivalent stock or
security.--A tokenized digital asset (and a wrapped digital
asset with respect to which the reference digital asset is a
traded digital asset) shall be treated as substantially
identical to any stock, security, or traded digital asset if
such tokenized digital asset (or such wrapped digital asset) is
economically equivalent to such stock, security, or traded
digital asset.
``(4) Functional currency other than the dollar.--In the
case of any taxpayer or qualified business unit (as defined in
section 989(a)), a qualified U.S. dollar stablecoin shall not
be treated as a qualified U.S. dollar stablecoin for purposes
of paragraph (1)(B) if such taxpayer or qualified business unit
uses a functional currency other than the dollar.''.
(c) Exception for Certain Acquisitions of Digital Assets.--Section
1091, as amended by subsection (b), is amended by adding at the end the
following new subsection:
``(h) Exception for Certain Acquisitions of Traded Digital
Assets.--The acquisition of a traded digital asset shall not be taken
into account under this section if such traded digital asset is
acquired--
``(1) in connection with the validation of digital asset
transactions (including digital asset validation supporting
activities), or
``(2) in a transaction which is part of a regular or
periodic series of acquisitions of traded digital assets which
are included by the taxpayer as ordinary income.''.
(d) Conforming Amendments.--
(1) Section 1091(a) is amended by striking the last
sentence.
(2) Section 1091(e) (as amended by subsection (a)) is
amended to read as follows:
``(e) Certain Short Sales of Specified Assets and Specified Asset
Futures 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, exchange, or termination of a specified asset futures
contract to sell) specified assets if, within a period beginning 30
days before the date of such closing and ending 30 days after such
date--
``(1) substantially identical specified assets were sold,
or
``(2) another short sale of (or specified asset futures
contracts to sell) substantially identical specified assets was
entered into.
For purposes of this subsection, the term ``specified asset futures
contract'' has the meaning provided by section 1234B(c).''.
(3) The heading of section 1091 is amended by striking
``stock or securities'' and inserting ``specified assets''.
(4) The headings of subsections (b), (c), and (d) of
section 1091 are each amended by striking ``Stock'' each place
it appears and inserting ``Specified Assets''.
(5) The item relating to section 1091 in the table of
sections for part VII of subchapter O of chapter 1 is amended
by striking ``stock or securities'' and inserting ``specified
assets''.
(6) Section 312(f)(1) is amended by striking ``stock or
securities'' and inserting ``specified assets''.
(7) Section 1256(f)(5) is amended by striking ``stock or
securities'' and inserting ``specified assets''.
(8) Section 6045(g)(2)(B)(ii) is amended--
(A) by striking ``stock or securities'' and
inserting ``specified assets'', and
(B) by striking ``identical securities'' and
inserting ``identical specified assets''.
(e) Effective Date.--The amendments made by this section shall
apply to dispositions after the date of the introduction of this Act.
(f) Transition Rule Relating to Broker Reporting.--For purposes of
section 6045 of the Internal Revenue Code of 1986, in the case of the
sale or other disposition before January 1, 2028, of a traded digital
asset to which section 1091 would not have applied but for the
amendments made by this section, the customer's adjusted basis may be
determined without regard to section 1091 of such Code.
SEC. 302. APPLICATION OF CONSTRUCTIVE SALE RULES TO DIGITAL ASSETS.
(a) In General.--Section 1259(b)(1) is amended by inserting ``,
digital asset (other than a qualified U.S. dollar stablecoin)'' after
``debt instrument''.
(b) Application of Exception for Sales of Nonpublicly Traded
Property.--Section 1259(c)(2) is amended by inserting ``or widely
traded digital asset'' after ``marketable security (as defined in
section 453(f))''.
(c) Treatment of Tokenized Digital Assets as Substantially
Identical to Economically Equivalent Financial Property.--Section
1259(c) is amended by adding at the end the following new paragraph:
``(5) Treatment of tokenized digital assets as
substantially identical to economically equivalent financial
property.--A tokenized digital asset shall be treated as
substantially identical to any stock, debt instrument, or
partnership interest if such tokenized digital asset is
economically equivalent to such stock, debt instrument, or
partnership interest.''.
(d) Functional Currency Other Than the Dollar.--Section 1259(e) is
amended by adding at the end the following new paragraph:
``(4) Qualified u.s. dollar stablecoins and functional
currency other than the dollar.--In the case of any taxpayer or
qualified business unit (as defined in section 989(a)), a
qualified U.S. dollar stablecoin (determined without regard to
this paragraph) shall not be treated as a qualified U.S. dollar
stablecoin for purposes of this section if such taxpayer or
qualified business unit uses a functional currency other than
the dollar.''.
(e) Effective Date.--The amendments made by this section shall
apply to constructive sales after the date of the introduction of this
Act.
SEC. 303. APPLICATION OF SUBPART F AND PFIC RULES.
(a) In General.--Section 954(c)(1)(B) is amended--
(1) by striking ``or'' at the end of clause (ii),
(2) by redesignating clause (iii) as clause (iv), and
(3) by inserting after clause (ii) the following new
clause:
``(iii) which is a digital asset, or''.
(b) Certain Passive Digital Asset Validation Supporting Income.--
Section 954(c)(1) is amended by adding at the end the following new
subparagraphs:
``(I) Certain passive digital asset validation
supporting income.--Income derived from staking,
mining, or similar activities in support of the
validation of digital asset transactions, unless--
``(i) such income is derived in the active
conduct of a trade or business of validating
such transactions,
``(ii) substantially all of the controlled
foreign corporation's digital assets are
related to such trade or business, and
``(iii) substantially all of the activities
of such trade or business occur in the same
country as the country in which such
corporation is created or organized (or in the
case of a qualified business unit described in
section 989(a), is attributable to activities
of the unit in the country in which the unit
both maintains its principal office and
conducts substantial business activity).
``(J) Certain payments pursuant to digital asset
lending agreements.--In the case of an agreement
described in section 1058(a) pursuant to which traded
digital assets are transferred, any payment made
pursuant to such agreement other than any payment
described in section 1058(b)(1).''.
(c) Exception for Dealers.--Section 954(c)(2)(C) is amended--
(1) in clause (i)--
(A) by striking ``or (G)'' and inserting ``(G), or
(I)'', and
(B) by striking ``and'' at the end,
(2) by striking the period at the end of clause (ii) and
inserting ``, and'', and
(3) by adding at the end the following new clause:
``(iii) if such dealer is a dealer in
covered digital assets (within the meaning of
section 475), any interest or dividend (or
equivalent amount described in subparagraph (E)
or (G) of paragraph (1)) or income described in
paragraph (1)(I), from any transaction
(including any hedging transaction) entered
into in the ordinary course of such dealer's
trade or business as such a dealer in covered
digital assets, but only if the income from the
transaction is attributable to activities of
the dealer in the country under the laws of
which the dealer is created or organized (or in
the case of a qualified business unit described
in section 989(a), is attributable to
activities of the unit in the country in which
the unit both maintains its principal office
and conducts substantial business activity).''.
(d) Regulations.--The Secretary of the Treasury shall, not later
than 12 months after the date of the enactment of this Act, issue such
regulations or other guidance (under the authority granted to such
Secretary under section 7805 of the Internal Revenue Code of 1986) to
clarify the appropriate tax treatment of certain foreign entities (and
United States persons related to such entities or involved in the
governance of such entities) established in connection with
organizations commonly referred to as decentralized autonomous
organizations, which are established in a foreign country as a
foundation under foreign law (or other similar structure with a
purported purpose other than profit), including--
(1) clarifying the methods by which such foreign entities
may reorganize as domestic corporations under subchapter C of
chapter 1 of such Code, and
(2) providing, in appropriate circumstances, temporary safe
harbors to encourage such foreign entities (which were
organized before the date of the introduction of this Act) to
complete such reorganizations promptly after the enactment of
this Act.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years of foreign corporations ending after the date of
the enactment of this Act.
SEC. 304. RULES RELATED TO POSSESSIONS FOR DETERMINING SOURCE OF GAIN
OR LOSS ON DISPOSITION OF TRADED DIGITAL ASSETS.
(a) Reporting Requirement.--Section 937(c) is amended by adding at
the end the following new paragraph:
``(3) Special rules for traded digital assets.--
``(A) In general.--If an individual required to
file a specified notice under paragraph (1) is a
specified possession resident individual (as defined in
subsection (d)(3)) for the taxable year to which such
notice relates, such notice shall include the fair
market value and basis of each traded digital asset
property held by the taxpayer as of the close of the
preceding taxable year.
``(B) De minimis exception.--Subparagraphs (A) and
(E) shall not apply if the aggregate fair market value
of traded digital asset property which would (but for
this subparagraph) be required to be included in a
notice under such subparagraph (A) or (E), as the case
may be, does not exceed $10,000.
``(C) Specified notice.--For purposes of this
paragraph, the term `specified notice' means a notice
required under paragraph (1) by reason of the
individual taking the position for United States income
tax reporting purposes that the individual became a
bona fide resident of a possession specified in
subsection (a)(1).
``(D) Traded digital asset property.--For purposes
of this paragraph, the term `traded digital asset
property' has the meaning given such term in subsection
(d)(5).
``(E) Transition rule.--In the case of an
individual who was required to file a specified notice
under paragraph (1) with respect to one of the 9
taxable years immediately preceding the first taxable
year of the taxpayer beginning after December 31, 2026,
and who was a specified possession resident individual
(as defined in subsection (d)(3)) for such taxable
year, such individual shall file a notice with the
Secretary stating the fair market value and basis
(determined as of the last day of the taxable year
preceding the taxable year to which such notice
relates) of each traded digital asset property (as
defined in subsection (d)(5)) that was held by the
taxpayer both on such last day and on January 1, 2027.
The notice required under the preceding sentence shall
be filed with the Secretary not later than the earlier
of--
``(i) the due date of the taxpayer's return
of tax for the taxpayer's first taxable year
beginning after December 31, 2026, during which
the taxpayer disposes of any traded digital
asset property with respect to which
information is required to be included in such
notice, and
``(ii) such date as the Secretary may
specify under subsection (d)(6)(B)(i).''.
(b) Special Rules for Determining Source.--Section 937 is amended
by adding at the end the following new subsection:
``(d) Special Rules for Traded Digital Assets.--
``(1) In general.--Notwithstanding subsection (b)(1) (and
except as provided in subsection (b)(2)), in the case of any
specified possession resident individual for any taxable year,
any gain recognized (directly or indirectly) on the disposition
of traded digital asset property during such taxable year--
``(A) shall, except as provided in subparagraph
(B), be treated as gain from sources within the United
States, and
``(B) shall be treated as gain from sources within
the relevant possession (and not from sources within
the United States) to the extent that the taxpayer--
``(i) timely provided the information
specified in subsection (c)(3) to the Secretary
with respect to such property, and
``(ii) demonstrates to the satisfaction of
the Secretary that such gain is properly
attributable to the increase in the value of
such property during periods that such
individual was a bona fide resident of such
possession.
``(2) Election for widely traded digital assets.--
``(A) In general.--In the case of any electing
individual--
``(i) such individual shall recognize gain
on any widely traded digital assets held by
such individual as of the close of the taxable
year preceding the taxable year described in
subparagraph (B) as if such assets were sold
for their fair market value as of such time,
``(ii) proper adjustment shall be made in
the amount of any gain or loss subsequently
realized for gain taken into account under
clause (i), and
``(iii) paragraph (1) shall not apply to
any disposition of a widely traded digital
asset by such taxpayer (without regard to
whether clause (i) applied to such asset).
``(B) Electing individual.--For purposes of this
paragraph, the term `electing individual' means any
specified possession resident individual who elects (in
such manner as the Secretary may provide) the
application of this paragraph not later than the due
date for the return of tax for the taxable year for
which such individual first becomes a bona fide
resident of the relevant possession.
``(3) Specified possession resident individual.--For
purposes of this subsection, the term `specified possession
resident individual' means, with respect to any taxable year,
any citizen of the United States who--
``(A) is a bona fide resident of Guam, American
Samoa, the Northern Mariana Islands, Puerto Rico, or
the Virgin Islands for such taxable year, and
``(B) was a resident of the United States at any
time during the preceding 10 taxable years.
``(4) Relevant possession.--For purposes of this
subsection, the term `relevant possession' means, with respect
to any specified possession resident individual for any taxable
year, the possession referred to in paragraph (3)(A) with
respect to which such individual is a bona fide resident for
such taxable year.
``(5) Traded digital asset property.--For purposes of this
subsection, the term `traded digital asset property' means--
``(A) any traded digital asset,
``(B) any notional principal contract with respect
to a traded digital asset,
``(C) any evidence of an interest in, or a
derivative instrument in, any traded digital asset
described in subparagraph (A) or (B), including any
option, forward contract, futures contract, short
position, and any similar instrument in such traded
digital asset,
``(D) to the extent provided by the Secretary, any
position which--
``(i) is not a traded digital asset
property described in subparagraph (A), (B), or
(C), and
``(ii) is a hedge with respect to such a
traded digital asset property, or
``(E) any interest in any entity if--
``(i) the taxpayer contributed any traded
digital asset to such entity (directly or
indirectly), or
``(ii) more than 25 percent of the value of
such entity is derived (directly or indirectly)
from traded digital assets (other than
qualified U.S. dollar stablecoins), determined
without regard to any assets acquired by such
entity as part of a plan a principal purpose of
which is to prevent interests in such entity
from being treated as traded digital assets for
purposes of this section.
``(6) Regulations.--The Secretary shall issue regulations
or other guidance as may be necessary or appropriate to carry
out the purposes of this subsection, including regulations or
other guidance--
``(A) treating gain on dispositions of traded
digital asset property by a partnership as described in
section 702(a)(7) to the extent such gain is taken into
account (directly or indirectly) in the distributive
share of any specified possession resident individual,
``(B) providing for the appropriate allocation of
losses on the disposition of traded digital asset
property with respect to specified possession resident
individuals, and
``(C) providing appropriate transition rules for
individuals who first became a bona fide resident of
the relevant possession during one of the 9 taxable
years preceding the first taxable year of the taxpayer
beginning after December 31, 2026, including
alternative rules--
``(i) for timely providing the information
described in subsection (c)(3),
``(ii) for timely making the election
described in paragraph (2)(B), and
``(iii) for applying paragraph (2)(A)--
``(I) with respect to the taxable
year for which the election is timely
made under clause (ii) of this
subparagraph, and
``(II) only to widely traded
digital assets acquired before becoming
a bona fide resident of the relevant
possession and not disposed of before
January 1, 2027.''.
(c) Limitation on Assessment and Collection.--Section 6501(c)(8)(A)
is amended by inserting ``937(c)(3),'' before ``1298(f),''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2026.
SEC. 305. APPLICATION OF REGISTRATION-REQUIRED OBLIGATION RULES.
(a) Exception for Qualified U.S. Dollar Stablecoins.--Section
163(f)(2)(A) is amended--
(1) by striking ``or'' at the end of clause (ii),
(2) by striking the period at the end of clause (iii) and
inserting ``, or'', and
(3) by adding at the end the following new clause:
``(iv) is a qualified U.S. dollar
stablecoin.''.
(b) Clarification of Treatment of Digital Assets.--Section 4701 is
amended by adding at the end the following new subsection:
``(c) Digital Assets.--
``(1) Location of disclosure statement.--In the case of any
digital asset, the requirement of clause (iii) of subsection
(b)(1)(B) shall be treated as satisfied if the statement
described therein is included in all written terms or marketing
materials with respect to such digital asset and in such other
locations or documents as the Secretary may prescribe in
regulations.
``(2) Treatment of digital assets without a fixed maturity
date.--In the case of any digital asset that does not have a
fixed maturity date at issue, the date of maturity of such
asset for purposes of subsection (a)(2) shall be treated as the
date that is 25 years after the date of issuance of such
digital asset.''.
(c) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
taxable years ending after the date of the introduction of this
Act.
(2) Clarification of treatment of digital assets without a
fixed maturity date.--The amendment made by subsection (b)
shall apply to digital assets issued after the date of the
introduction of this Act.
SEC. 306. CERTAIN RULES RELATED TO CHARACTER OF GAINS AND LOSSES
RELATING TO DIGITAL ASSETS.
(a) Application of Worthless Asset Rules.--
(1) In general.--Section 165 is amended by redesignating
subsection (m) as subsection (n) and by inserting after
subsection (l) the following new subsection:
``(m) Worthless Digital Assets.--If any digital asset (other than a
tokenized digital asset described in subsection (g)(2)(D)) becomes
worthless during the taxable year, the loss resulting therefrom shall,
for purposes of this subtitle, be treated as a loss from the sale or
exchange, on the last day of the taxable year, of such digital
asset.''.
(2) Certain tokenized securities.--Section 165(g)(2) is
amended--
(A) by striking the semicolon at the end of
subparagraph (A) and inserting a comma,
(B) by striking ``; or'' at the end of subparagraph
(B) and inserting a comma,
(C) by striking the period at the end of
subparagraph (C) and inserting ``, or'', and
(D) by adding at the end the following new
subparagraph:
``(D) a tokenized digital asset that is
economically equivalent to a security described in
subparagraph (A), (B), or (C).''.
(b) Application of Rules for Futures Contracts.--
(1) In general.--Section 1234B(c) is amended by striking
all that precedes ``any security future (as defined'' and
inserting the following:
``(c) Specified Asset Futures Contract.--For purposes of this
section--
``(1) In general.--The term `specified asset futures
contract' means--
``(A) any securities futures contract, and
``(B) any futures contract in a digital asset.
``(2) Securities futures contract.--The term `securities
futures contract' means''.
(2) Conforming amendments.--
(A) Section 1234A(1) is amended by striking
``securities futures contract'' and inserting
``specified asset futures contract''.
(B) Subsections (a)(1), (b), and (d) of section
1234B are each amended by striking ``securities futures
contract'' and inserting ``specified asset futures
contract''.
(C) Section 1234B(e) is amended by striking
``securities futures contracts'' and inserting
``specified asset futures contracts''.
(D) The heading of section 1234B is amended by
striking ``Securities Futures Contracts'' and inserting
``specified asset futures contracts''.
(E) The item relating to section 1234B in the table
of sections for part IV of subchapter P of chapter 1 is
amended by striking ``securities futures contracts''
and inserting ``specified asset futures contracts''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years ending after the date of the enactment of this
Act.
SEC. 307. MISCELLANEOUS PROVISIONS.
(a) Distributions of Traded Digital Assets From a Partnership to a
Partner.--
(1) Traded digital assets treated as marketable
securities.--Section 731(c)(2)(A) is amended--
(A) by striking ``means financial instruments'' and
inserting ``means--
``(i) financial instruments'',
(B) by striking the period at the end and inserting
``, and'', and
(C) by adding at the end the following new clause:
``(ii) traded digital assets (determined
without regard to clause (iii) of section
7701(p)(2)(A)) other than specified stablecoins
(as defined in subsection (d)(4)(A)).''.
(2) Treatment of distributions of specified stablecoins.--
Section 731 is amended--
(A) by redesignating subsection (d) as subsection
(e), and
(B) by inserting after subsection (c) the following
new subsection:
``(d) Treatment of Specified Stablecoins.--
``(1) In general.--For purposes of subsection (a)(1) and
section 737--
``(A) the term `money' includes specified
stablecoins, and
``(B) such specified stablecoins shall be taken
into account at their fair market value as of the date
of the distribution.
``(2) Basis of securities distributed.--Except as otherwise
provided by the Secretary--
``(A) In general.--For purposes of subsection
(c)(4), the term `marketable securities' includes
specified stablecoins (other than exempt U.S. dollar
stablecoins).
``(B) Exempt u.s. dollar stablecoins.--In the case
of any exempt U.S. dollar stablecoin, paragraph (1)
shall be applied by substituting `sections 732, 733,
and 737' for `section 737'.
``(3) Application of certain other rules.--Except as
otherwise provided by the Secretary, for purposes of paragraphs
(5) and (6) of subsection (c), the term `marketable securities'
includes specified stablecoins.
``(4) Definitions.--For purposes of this subsection--
``(A) Specified stablecoin.--The term `specified
stablecoin' means any digital asset which is designed
to track the value of the functional currency of the
partner to which such digital asset is distributed.
``(B) Exempt u.s. dollar stablecoin.--The term
`exempt U.S. dollar stablecoin' means any specified
stablecoin if--
``(i) the functional currency referred to
in subparagraph (A) with respect to such
stablecoin is the dollar, and
``(ii) no gain or loss would have been
recognized by reason of section 1063 if the
partnership had sold such stablecoin for its
redemption value (as defined in section
1063(d)) immediately before distribution.
``(5) Regulations.--The Secretary shall prescribe such
regulations or other guidance as may be necessary or
appropriate to carry out the purposes of this subsection,
including regulations or other guidance to prevent the
avoidance of such purposes.''.
(3) Conforming amendments.--Section 737(e) is amended--
(A) by inserting ``and specified stablecoins''
after ``marketable securities'',
(B) by striking ``section 731(c)'' and inserting
``section 731'', and
(C) by inserting ``and Specified Stablecoins''
after ``Marketable Securities'' in the heading thereof.
(4) Effective date.--The amendments made by this subsection
shall apply to distributions made after December 31, 2026.
(b) Traded Digital Assets Taken Into Account in Determining
Investment Company Status.--
(1) In general.--Section 351(e)(1)(B) is amended--
(A) by redesignating clauses (iv) through (viii) as
clauses (v) through (ix), respectively, and
(B) by inserting after clause (iii) the following
new clause:
``(iv) any traded digital asset (determined
without regard to clause (iii) of section
7701(p)(2)(A)),''.
(2) Conforming amendments.--
(A) Section 351(e)(1)(B)(v) (as redesignated by
paragraph (1)) is amended by striking ``clause (v) or
(viii)'' and inserting ``clause (vi) or (ix)''.
(B) Section 351(e)(1)(B)(vii) (as redesignated by
paragraph (1)) is amended by striking ``clause (viii)''
and inserting ``clause (ix)''.
(C) Section 351(e)(1)(B)(viii) (as redesignated by
paragraph (1)) is amended by striking ``clauses (i)
through (v) or clause (viii)'' and inserting ``clauses
(i) through (vi) or clause (ix)''.
(D) Section 351(e)(1)(B) is amended in the matter
following clause (ix) (as redesignated by paragraph
(1)) by striking ``clauses (i) through (v)'' and
inserting ``clauses (i) through (vi)''.
(3) Effective date.--The amendments made by this subsection
shall apply to transfers made after December 31, 2026.
(c) Certain Stablecoin Lending Treated as Indebtedness.--
(1) In general.--Subpart D of part V of subchapter P of
chapter 1 is amended by adding at the end the following new
section:
``SEC. 1289. STABLECOIN LENDING.
``(a) In General.--Except as otherwise provided by the Secretary,
for purposes of this title, the lending, rental, sale and repurchase,
or other transfer of specified stablecoins shall be treated as
indebtedness (and transfers made pursuant to such lending, rental, sale
and repurchase, or other transfer shall be treated as interest) in the
same manner, and to the same extent, as the equivalent transfer of
money.
``(b) Specified Stablecoin.--Except as otherwise provided by the
Secretary, for purposes of this section, the term `specified
stablecoin' means any digital asset which is designed to track the
value of any currency or currencies.
``(c) Special Rule for Sale and Repurchases Involving Currency or
Different Types of Specified Stablecoin.--Except as otherwise provided
by the Secretary, for purposes of this section, a sale (or repurchase)
of a specified stablecoin in connection with a repurchase (or sale) of
currency or a different type (determined under rules similar to the
rules of section 1051(b)(2)) of specified stablecoin shall be treated
as a sale and repurchase of a specified stablecoin.
``(d) Regulations.--The Secretary may issue such regulations or
other guidance as may be necessary or appropriate to carry out the
purposes of this section, including regulations or other guidance
providing rules for determining the source of interest income if the
payor is unknown and backup withholding and reporting rules if the
recipient of an interest payment is unknown.
``(e) Cross Reference.--For special rules applicable to transfers
of specified stablecoins that are indebtedness under this section, see
sections 1271 through 1288.''.
(2) Clerical amendment.--The table of sections for subpart
D of part V of subchapter P of chapter 1 is amended by adding
at the end the following new item:
``Sec. 1289. Stablecoin lending.''.
(3) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after December 31, 2026.
(d) Digital Assets Not Treated as Section 197 Intangibles.--
(1) In general.--Section 197(e) is amended by adding at the
end the following new paragraph:
``(8) Digital assets.--Except as otherwise provided by the
Secretary to prevent abuse, any digital asset.''.
(2) Effective date.--The amendment made by this subsection
shall apply to digital assets acquired after the date of the
introduction of this Act.
(e) Application of Straddle Rules to Traded Digital Assets, etc.--
(1) In general.--Section 1092(d)(1) is amended--
(A) by striking ``means any'' and inserting
``means--
``(A) any'',
(B) by striking the period at the end and inserting
``, and'', and
(C) by adding at the end the following new
subparagraph:
``(B) any traded digital asset (determined without
regard to clause (iii) of section 7701(p)(2)(A)).''.
(2) Effective date.--The amendments made by this subsection
shall apply to positions established after the date of the
enactment of this Act.
(f) Backup Withholding on Illiquid Digital Assets Paid for Digital
Asset Validation Supporting Activities.--
(1) In general.--Section 3406(h) is amended by adding at
the end the following new paragraph:
``(11) Certain illiquid digital assets paid for digital
asset validation supporting activities.--
``(A) In general.--In the case of an other
reportable payment that consists of specified illiquid
digital assets, except to the extent provided by the
Secretary in regulations or other guidance, the payor
shall be treated as having deducted and withheld from
such payment the amount specified in subsection (a)(1)
(and the proceeds of the liquidation referred to in
clause (ii) shall be treated as the amount deducted and
withheld under subsection (a)(1)) if such payor--
``(i) holds the applicable percentage of
such specified illiquid digital assets
(hereafter referred to as the `withheld amount
of digital assets') in a manner that prevents
the recipient from using or withdrawing the
withheld amount of digital assets,
``(ii) liquidates the withheld amount of
digital assets at fair market value not later
than the close of the first business day
following the close of such fixed period, and
``(iii) deposits the proceeds of such
liquidation at the time and in the same manner
as would be required with respect to an amount
withheld on the date of such liquidation.
``(B) Specified illiquid digital asset.--For
purposes of this paragraph, the term `specified
illiquid digital assets' means digital assets that
are--
``(i) transferred to the recipient in
exchange for digital asset validation
supporting activities, and
``(ii) restricted from being sold,
exchanged, transferred, or otherwise disposed
of, for a fixed period that ends after the date
of such transfer.
``(C) Applicable percentage.--For purposes of this
paragraph, the term `applicable percentage' means the
rate of tax referred to in subsection (a)(1), expressed
as a percentage.''.
(2) Effective date.--The amendment made by this subsection
shall apply to specified illiquid digital assets received after
December 31, 2026.
TITLE IV--CLARIFYING THE TAX TREATMENT OF MINING AND STAKING
SEC. 401. SOURCE AND CHARACTER OF MINING AND STAKING INCOME.
(a) Determination of Source.--Section 863 is amended by adding at
the end the following new subsection:
``(f) Treatment of Income From Digital Asset Validation Supporting
Activities.--
``(1) In general.--Income from digital asset validation
supporting activities shall be sourced--
``(A) in the United States if the taxpayer is a
United States resident, and
``(B) outside the United States if the taxpayer is
a nonresident.
``(2) Treatment of branches.--
``(A) Foreign branches.--In the case of a United
States person with a qualified business unit (as
defined in section 989(a)) in a foreign country, income
described in paragraph (1) that constitutes business
profits attributable to such unit shall be sourced
outside the United States.
``(B) U.S. branches.--In the case of a person that
is not a United States person and that maintains an
office or other fixed place of business in the United
States, income described in paragraph (1) attributable
to such office or other fixed place of business shall
be sourced in the United States.
``(C) Attribution.--For purposes of subparagraphs
(A) and (B), the Secretary may issue such regulations
or other guidance as the Secretary determines necessary
or appropriate for purposes of determining the amount
of business profits attributable to a qualified
business unit or office or other fixed place of
business.
``(3) Treatment of partnerships.--In the case of a
partnership, except as otherwise provided by the Secretary in
regulations or other guidance, this subsection shall be applied
at the partner level.
``(4) United states resident; nonresident.--For purposes of
this subsection, the terms `United States resident' and
`nonresident' have the meaning given such terms, respectively,
in section 865(g)(1), determined after application of section
865(g)(2).''.
(b) Determination of Character.--
(1) In general.--Part IV of subchapter P of chapter 1 is
amended by adding at the end the following new section:
``SEC. 1261. INCOME FROM DIGITAL ASSET VALIDATION SUPPORTING
ACTIVITIES.
``Income from digital asset validation supporting activities shall
be treated as ordinary income.''.
(2) Clerical amendment.--The table of sections for part IV
of subchapter P of chapter 1 is amended by adding at the end
the following new item:
``Sec. 1261. Income from digital asset validation supporting
activities.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 402. INVESTMENT TRUSTS ENGAGED IN DIGITAL ASSET STAKING.
(a) In General.--Section 7701(p), as added by section 601 of this
Act, is amended by adding at the end the following new paragraph:
``(13) Status of trusts engaged in digital asset staking.--
``(A) In general.--An entity or arrangement shall
not fail to be treated as a trust for purposes of this
title solely by reason of the power of the trustee of
such entity or under such arrangement to--
``(i) engage in staking digital assets held
by the trust,
``(ii) retain or distribute digital assets
received in connection with such staking,
``(iii) determine which digital assets held
by the trust to use in staking,
``(iv) to the extent that any digital
assets held by the trust are committed to
staking, take measures necessary or appropriate
to ensure that the trust has sufficient
liquidity to make distributions in redemption
of interests in the trust, including by
borrowing or entering into an agreement to
borrow money or digital assets to make such
distributions, and
``(v) perform acts related to the exercise
of the powers described in the preceding
clauses of this subparagraph.
``(B) Not to apply to validating trade or
business.--Subparagraph (A) shall not apply in the case
of an entity or arrangement engaged in the active
conduct of a trade or business of validating digital
asset transactions.
``(C) Regulations.--The Secretary may prescribe
such regulations or other guidance as may be necessary
or appropriate to carry out the purposes of this
paragraph.''.
(b) Clerical Amendment.--The heading for section 7701(p), as added
by section 601 of this Act, is amended by inserting ``and Special
Rules'' after ``Definitions''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years ending after the date of the enactment of this
Act.
TITLE V--ENSURING THAT OWNERS AND USERS OF DIGITAL ASSETS FACE AN
APPROPRIATE TAX COMPLIANCE BURDEN
SEC. 501. BROKER REQUIREMENTS.
(a) In General.--
(1) Exception for qualified u.s. dollar stablecoins
acquired at redemption value.--Section 6045(g)(3)(D) is amended
to read as follows:
``(D) Specified digital asset.--The term `specified
digital asset' means any digital asset other than a
qualified U.S. dollar stablecoin the customer's basis
in which at the time of acquisition is at least 99.5
percent of such stablecoin's redemption value (as
defined in section 1063(d)).''.
(2) Conforming amendments.--
(A) Section 6045(c)(1)(D) is amended by striking
``digital assets'' and inserting ``specified digital
assets''.
(B) Subparagraph (B)(iv) and subparagraph (C)(iii)
of section 6045(g)(3) are each amended by striking
``digital asset'' and inserting ``specified digital
asset''.
(C) Section 6050I(d)(3) is amended by striking
``(as defined in section 6045(g)(3)(D))''.
(3) Transition rules.--The Secretary of the Treasury, or
the Secretary's delegate, may, consistent with the purposes of
section 6045(g) of the Internal Revenue Code of 1986--
(A) provide temporary safe harbor rules for brokers
that address periods before the date that is 18 months
after the issuance of final regulations or other
guidance under section 1063(e) of such Code, and
(B) provide rules that allow brokers to treat, for
purposes of section 6045(g)(3)(D) of such Code (as
amended by this section), the customer's basis in a
qualified U.S. dollar stablecoin (as defined in section
7701(p)(7) of such Code) at time of acquisition as
being equal to the redemption value (as defined in
section 1063(d)) of such stablecoin if--
(i) such stablecoin was acquired before the
date that is 18 months after the issuance of
final regulations or other guidance under
section 1063(e) of such Code, and
(ii) the customer's adjusted basis
(determined in accordance with section
6045(g)(2)(B) of such Code) in such stablecoin
as of the later of--
(I) December 31, 2026, or
(II) the date that such stablecoin
first became a qualified U.S. dollar
stablecoin (as so defined),
is at least 99.5 percent of such redemption
value.
(b) Special Rules for Digital Assets Used to Pay De Minimis Digital
Asset Fees.--Section 6045(g) is amended by adding at the end the
following new paragraph:
``(7) Special rules for digital assets used to pay de
minimis digital asset fees.--
``(A) In general.--Except as otherwise provided by
the Secretary, in the case of the disposition of a
digital asset with respect to which no gain or loss is
recognized by reason of section 1044(a)--
``(i) except as provided in clause (ii),
subsection (a) shall not apply to such
disposition, and
``(ii) the broker shall include in a return
under subsection (a) such aggregate information
relating to such dispositions of the taxpayer
as the Secretary determines necessary or
appropriate, including for purposes of
verifying the taxpayer's basis in digital
assets held by the taxpayer.
``(B) Application of de minimis exception.--If the
broker has been notified by the taxpayer or the
Secretary that the exception described in section
1044(f)(1)(B) applies to such taxpayer, the broker may
treat such exception as continuing to apply with
respect to such taxpayer for any calendar year
(hereafter in this subparagraph referred to as the
`current calendar year') unless--
``(i) such taxpayer had more than 5,000
digital asset transactions with such broker
during any of the 5 preceding calendar years
and the taxpayer has not notified the broker
that such exception applies to such taxpayer
for the current calendar year,
``(ii) such taxpayer or the Secretary
notifies such broker that such exception does
not apply to such taxpayer, or
``(iii) such broker otherwise knows, or has
reason to know, that such exception does not
apply to such taxpayer.''.
(c) Special Rules for Simplified Accounting for Widely Traded
Digital Assets.--Section 6045(g), as amended by subsection (b), is
amended by adding at the end the following new paragraph:
``(8) Special rules for simplified accounting for widely
traded digital assets.--
``(A) In general.--Except as otherwise provided by
the Secretary, in the case of widely traded digital
assets with respect to which an election under section
1051 applies--
``(i) except as provided in clause (ii),
subsection (a) shall not apply to dispositions
of such assets, and
``(ii) the broker shall include in a return
under subsection (a) such information with
respect to each designated type of such assets
(within the meaning of section 1051) as the
Secretary may provide, including--
``(I) aggregate reporting with
respect to sales, exchanges,
dispositions, and acquisitions of
assets of such designated type
(including net gain or loss thereon),
``(II) the fair market value of
assets of such designated type held by
the taxpayer as of the beginning and
end of the calendar year, and
``(III) such other information as
the Secretary may require with respect
to assets of such designated type for
purposes of the administration of
section 1051.
``(B) Determination of election based on broker
notification.--For purposes of subparagraph (A), the
broker shall take into account any election under
section 1051 (and any revocation of such election) if
(and only if) the taxpayer or the Secretary notifies
such broker of such election (or revocation) or such
broker otherwise knows, or has reason to know, of such
election (or revocation).''.
(d) Effective Date.--The amendments made by this section shall
apply to returns required to be filed, and statements required to be
furnished, after December 31, 2027.
SEC. 502. ESTABLISHMENT OF DIGITAL ASSET VOLUNTARY DISCLOSURE PROGRAM.
(a) In General.--Not later than 12 months after the date of the
enactment of this Act, the Secretary shall establish the Digital Asset
Voluntary Disclosure Program (hereinafter referred to as the
``program'') to allow eligible taxpayers to remedy digital asset
violations by fulfilling the remedial requirements described in
subsection (b).
(b) Remedial Requirements.--The remedial requirements of this
subsection are fulfilled if, at such time and in such manner as the
Secretary determines appropriate, the eligible taxpayer--
(1) files, not later than 24 months after the date on which
the Secretary establishes the program, an amended return for
each applicable taxable year with respect to which the proper
amount of any tax item is affected by any digital asset
violation,
(2) provides immediate payment, or the Secretary accepts
from such taxpayer (and does not thereafter terminate) an
installment agreement under section 6159 to provide payment,
of--
(A) the aggregate amount of the deficiency of tax
(including any interest thereon) attributable to all
digital asset violations, and
(B) the digital asset violation penalty, and
(3) timely fulfills such other requirements, and provides
such other information, as the Secretary determines
appropriate.
(c) Benefits.--If the remedial requirements described in subsection
(b) have been fulfilled to the satisfaction of the Secretary--
(1) in the case of an uncertified eligible taxpayer--
(A) the Secretary shall not assert any further
penalties under sections 6662 and 6663 with respect to
any deficiency of tax attributable to any digital asset
violation properly disclosed by the taxpayer under the
program, and
(B) the Secretary shall not use any information
properly disclosed by the taxpayer under the program
for purposes of referring such taxpayer for criminal
investigation, or prosecuting such taxpayer, under
section 7201, 7203, or 7206 (other than paragraph (2)
thereof) with respect to any digital asset violation
properly disclosed by the taxpayer under the program,
and
(2) in the case of a certified eligible taxpayer, the
Secretary shall not assert any further penalties under section
6662 with respect to any deficiency of tax attributable to any
digital asset violation properly disclosed by the taxpayer
under the program.
(d) Definitions.--For purposes of this section--
(1) Eligible taxpayer.--
(A) In general.--The term ``eligible taxpayer''
means any uncertified eligible taxpayer or certified
eligible taxpayer.
(B) Uncertified eligible taxpayer.--The term
``uncertified eligible taxpayer'' means any taxpayer
who--
(i) committed any digital asset violation
during the applicable period,
(ii) submits (in such form and manner as
the Secretary may prescribe), not later than 24
months after the date on which the Secretary
establishes the program, an application which
is approved by the Secretary to participate
therein,
(iii) does not certify, under penalty of
perjury, that no digital asset violation
occurring during the applicable period was
committed fraudulently or willfully, and
(iv) if subject to--
(I) any ongoing criminal
investigation with respect to any
digital asset violation, or
(II) any ongoing audit or
examination by the Internal Revenue
Service with respect to any applicable
taxable year,
has requested and been issued a waiver by the
Secretary to nonetheless participate in the
program. For purposes of clause (ii), the
Secretary may impose a reasonable fee for
submission of an application to participate in
the program.
(C) Certified eligible taxpayer.--The term
``certified eligible taxpayer'' means any taxpayer
who--
(i) committed any digital asset violation
during the applicable period,
(ii) as an addendum to each amended return
filed under subsection (b)(1) (or at such other
time and in such other form and manner as the
Secretary may prescribe), certifies, under
penalty of perjury, that no digital asset
violation occurring during the applicable
period was committed fraudulently or willfully,
and
(iii) if subject to any ongoing audit or
examination by the Internal Revenue Service
with respect to any applicable taxable year,
has requested and been issued a waiver by the
Secretary to nonetheless participate in the
program.
(2) Digital asset violation.--
(A) In general.--The term ``digital asset
violation'' means, with respect to any eligible
taxpayer, any instance in which such taxpayer failed to
comply with a requirement under the Internal Revenue
Code of 1986 if--
(i) such instance relates to the ownership
of, or transactions in, digital assets during
the applicable period, and
(ii) such failure affects the proper amount
of any tax item with respect to any applicable
taxable year.
(B) Digital asset.--For purposes of subparagraph
(A), the term ``digital asset'' means, except as
otherwise provided by the Secretary, any digital
representation of value which is recorded on a
cryptographically secured distributed ledger or any
similar technology as specified by the Secretary.
(3) Applicable period.--The term ``applicable period''
means, with respect to any eligible taxpayer, the period--
(A) beginning with the later of--
(i) the taxpayer's first taxable year with
respect to which the proper amount of any tax
item is affected by any digital asset
violation, or
(ii) the taxpayer's first taxable year with
respect to which a return of tax was filed
during the 6-year period (3-year period in the
case of a certified eligible taxpayer)
immediately preceding the date of the enactment
of this Act, and
(B) ending with the taxpayer's last taxable year
ending before the date of the enactment of this Act.
(4) Applicable taxable year.--The term ``applicable taxable
year'' means, with respect to any eligible taxpayer, any
taxable year during the applicable period with respect to such
taxpayer.
(5) Digital asset violation penalty.--
(A) In general.--The digital asset violation
penalty is an amount equal to the sum of--
(i) 25 percent (0 percent in the case of a
certified eligible taxpayer) of the aggregate
amount of so much of the deficiency of tax
attributable to all digital asset violations as
does not exceed $25,000 with respect to each
applicable taxable year, plus
(ii) 40 percent (5 percent in the case of a
certified eligible taxpayer) of the aggregate
amount of so much of the deficiency of tax
attributable to all digital asset violations as
exceeds $25,000 with respect to each applicable
taxable year.
(B) Special rules for amended returns filed after
certain date.--In the case of an amended return with
respect to any applicable taxable year filed under
subsection (b)(1) after the date that is 12 months
after the date on which the Secretary establishes the
program, subparagraph (A) shall be applied with respect
to such applicable taxable year--
(i) by substituting ``40 percent'' in lieu
of ``25 percent'' in clause (i) thereof,
(ii) by substituting ``5 percent'' in lieu
of ``0 percent'' in clause (i) thereof,
(iii) by substituting ``50 percent'' in
lieu of ``40 percent'' in clause (ii) thereof,
(iv) by substituting ``10 percent'' in lieu
of ``5 percent'' in clause (ii) thereof, and
(v) in the case of a certified eligible
taxpayer, by substituting ``$100,000'' in lieu
of ``$25,000'' each place it appears.
(C) Waiver by secretary.--The Secretary may waive
part or all of the digital asset violation penalty to
the extent the Secretary determines that such a waiver
would be in the interests of justice and the proper
administration of the internal revenue laws, including
in cases involving digital asset violations
attributable to reasonable cause (as determined by the
Secretary).
(6) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury or the Secretary's delegate.
(e) Assessment Authority; Waiver of Restrictions and Limitations on
Assessment.--For purposes of this section, any deficiency of tax,
additional tax or amount, or digital asset violation penalty shall be
assessed, collected, and paid in the same manner as taxes, as provided
in section 6665(a) (without regard to any restrictions or limitations
on assessment described in section 6213 or 6501).
(f) References to Internal Revenue Code of 1986.--Except as
otherwise expressly provided, whenever in this section a reference is
made to a section, the reference shall be considered to be made to a
section of the Internal Revenue Code of 1986.
(g) Regulatory Authority.--The Secretary shall prescribe such
regulations or other guidance as may be necessary or appropriate to
carry out the purposes of this section, including with respect to the
provision of reasonable assurances to taxpayers that any information
properly disclosed under the program shall not be used in contravention
of any benefit described in subsection (c).
SEC. 503. TREASURY STUDY AND REPORT.
(a) In General.--The Secretary shall perform a study on the
feasibility of using new digital technologies, including zero-knowledge
proofs, smart contracts, and other blockchain technology for increased
compliance, efficiency, and data protection in connection with
information reporting, withholding, and taxpayer compliance regarding
digital asset transactions.
(b) Study Requirements.--In conducting the study under subsection
(a), the Secretary shall--
(1) investigate the extent to which such new digital
technology can--
(A) reduce compliance costs and burden for
withholding agents on cross-border transactions
involving digital assets,
(B) replace traditional information reporting,
withholding, transaction reports, and other financial
information reporting for digital asset transactions
using smart contract based withholding, instantly
verified self-reporting with zero-knowledge proofs, or
other trustworthy alternatives to existing third-party
information collection, withholding, and reporting for
on-chain transactions (or to provide an equivalent to
such collection and reporting in cases where no
intermediary currently provides equivalent data), and
(C) improve tax administration, reduce compliance
costs, and improve taxpayer data security,
(2) evaluate the effectiveness of current withholding and
backup withholding rules as applied to digital assets
(including digital assets derived from staking activities) and
assess whether existing timing, liquidity, valuation, and
remittance requirements are workable where digital assets may
be locked or otherwise unavailable for immediate use,
(3) identify challenges for payors, withholding agents, and
the Internal Revenue Service in applying existing withholding
and backup withholding rules and provide recommendations for
legislative changes that would improve administration of
withholding and backup withholding for digital assets,
(4) emphasize data security and individual privacy
improvements, including reducing identity theft risks from
providing sensitive information to parties other than the
Internal Revenue Service for reporting purposes, in considering
the efficacy of such new digital technologies, and
(5) coordinate with stakeholders, such as technology
developers, industry leaders, and data privacy and consumer
protection experts, to identify new digital technologies, that
are currently feasible or may be feasible in the near future,
to promote efficient tax administration and reduced compliance
burden for the digital economy.
(c) Report to Congress.--Not later than September 30, 2028, the
Secretary shall submit a written report to the Committee on Ways and
Means of the House of Representatives and the Committee on Finance of
the Senate that includes all of the findings of the Secretary with
respect to the study conducted under subsections (a) and (b). Such
report shall include a description of--
(1) the recommendations of the Secretary regarding the
adoption of any new digital technologies for the purposes
described in subsection (a),
(2) any legislative changes to the tax laws necessary to
implement such recommendations,
(3) any additional resources required by the Secretary for
such implementation, and
(4) the amount of time required to complete such
implementation.
(d) Secretary.--For purposes of this section, the term
``Secretary'' means the Secretary of the Treasury or the Secretary's
delegate.
TITLE VI--DEFINITIONS; REGULATIONS; RULES OF CONSTRUCTION
SEC. 601. DEFINITIONS.
Section 7701 is amended--
(1) by redesignating subsection (p) as subsection (q), and
(2) by inserting after subsection (o) the following new
subsection:
``(p) Definitions Related to Digital Assets.--For purposes of this
title--
``(1) Digital asset.--The term `digital asset' means,
except as otherwise provided by the Secretary, any digital
representation of value which is recorded on a
cryptographically secured distributed ledger or any similar
technology as specified by the Secretary.
``(2) Traded digital asset.--
``(A) In general.--The term `traded digital asset'
means, except as otherwise provided by the Secretary to
prevent abuse, any digital asset if--
``(i) such asset is fungible,
``(ii) quotations of such asset are readily
available on an exchange (or, in the case of an
exchange that does not provide quotations, such
quotations are readily ascertainable), and
``(iii) such asset is not a tokenized
digital asset.
``(B) Special rule for wrapped digital assets.--In
the case of any wrapped digital asset, except as
otherwise provided by the Secretary to prevent abuse,
such asset shall be treated as a traded digital asset
if, and only if, the reference digital asset with
respect to such wrapped digital asset is a traded
digital asset.
``(3) Widely traded digital asset.--
``(A) In general.--The term `widely traded digital
asset' means, with respect to any taxpayer for any
taxable year and except as otherwise provided by the
Secretary to prevent abuse, any traded digital asset
if--
``(i) quotations for such asset were
readily available on an exchange for the entire
calendar year which ends in or with the taxable
year preceding such taxable year,
``(ii) the market capitalization of such
asset exceeded $500,000,000 at substantially
all times during such calendar year, and
``(iii) not more than 10 percent of the
units of such asset were owned, directly or
indirectly, by the taxpayer or any person
described with respect to the taxpayer under
section 267(b) (applied without regard to
section 267(c)(3)) or section 707(b)(1) at any
time during such taxable year or such preceding
taxable year.
``(B) Special rule for wrapped digital assets.--In
the case of any wrapped digital asset, except as
otherwise provided by the Secretary to prevent abuse,
such asset shall be treated as a widely traded digital
asset with respect to any taxpayer if, and only if, the
reference digital asset with respect to such wrapped
digital asset is a widely traded digital asset with
respect to such taxpayer.
``(C) Authority to ensure reliable price
discovery.--For purposes of subparagraphs (A) and (B),
the term `prevent abuse' includes the exclusion of
assets that lack reliable price discovery or that the
Secretary determines are at risk of price manipulation.
``(D) Authority to adjust requirements.--The
Secretary may, by regulation, provide requirements that
apply in lieu of one or more of the requirements of
clauses (i) through (iii) of subparagraph (A) if the
Secretary determines that due to changes in market
conditions (including by reason of the enactment of
Federal digital asset market structure legislation)
that such alternative requirements would more
effectively or efficiently identify traded digital
assets for which there is consistent and reliable price
discovery.
``(E) Inflation adjustment.--In the case of any
calendar year after 2027, the $500,000,000 amount in
subparagraph (A)(ii) shall be increased by an amount
equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment
determined under section 1(f)(3) for such
calendar year, determined by substituting
`calendar year 2026' for `calendar year 2016'
in subparagraph (A)(ii) thereof.
Any increase determined under the preceding sentence
which is not a multiple of $100,000 shall be rounded to
the nearest multiple of $100,000.
``(4) Tokenized digital asset.--
``(A) In general.--The term `tokenized digital
asset' means any digital asset (other than any
qualified U.S. dollar stablecoin) if more than an
insignificant portion of the value of such digital
asset is derived from anything other than the operation
of the cryptographically secured distributed ledger on
which such digital asset is recorded (including the
protocols applicable to the operation of such ledger
with respect to such digital asset).
``(B) Special rule for wrapped digital assets.--In
the case of any wrapped digital asset, except as
otherwise provided by the Secretary to prevent abuse,
such asset shall be treated as a tokenized digital
asset if, and only if, the reference digital asset with
respect to such wrapped digital asset is a tokenized
digital asset.
``(5) Wrapped digital asset.--The term `wrapped digital
asset' means, except as otherwise provided by the Secretary to
prevent abuse, any digital asset if such asset--
``(A) is redeemable on demand, on a one-for-one
basis, for another digital asset, and
``(B) is recorded on a cryptographically secured
distributed ledger other than the cryptographically
secured distributed ledger on which the digital asset
referred to in subparagraph (A) is recorded.
``(6) Reference digital asset.--
``(A) In general.--The term `reference digital
asset' means, with respect to any wrapped digital
asset, the digital asset referred to in paragraph
(5)(A).
``(B) Special rule for rewrappings.--If, but for
this subparagraph, the reference digital asset with
respect to any wrapped digital asset would be a wrapped
digital asset (hereafter referred to in this paragraph
as the lower-tier wrapped digital asset)--
``(i) subparagraph (A) shall be applied
with respect to such lower-tier wrapped digital
asset, and
``(ii) the reference digital asset with
respect to such lower-tier wrapped digital
asset shall be treated as the reference digital
asset of such wrapped digital asset.
``(C) Multiple wrappings.-- If, after the
application of subparagraph (B), the reference digital
asset with respect to the lower-tier wrapped digital
asset is a wrapped digital asset, such subparagraph
shall be reapplied by treating such lower-tier wrapped
digital asset as the wrapped digital asset.
``(7) Stablecoin.--
``(A) Qualified u.s. dollar stablecoin.--The term
`qualified U.S. dollar stablecoin' means any U.S.
dollar stablecoin the issuer of which is--
``(i) a permitted payment stablecoin issuer
(as defined in section 2(23) of the GENIUS Act,
as in effect on the date of the enactment of
this paragraph), or
``(ii) a foreign payment stablecoin issuer
(as defined in section 2(12) of the GENIUS Act,
as so in effect) registered with the Office of
the Comptroller of the Currency under the
GENIUS Act (as so in effect).
``(B) U.S. dollar stablecoin.--The term `U.S.
dollar stablecoin' means--
``(i) a payment stablecoin (as defined in
section 2(22) of the GENIUS Act (as in effect
on the date of the enactment of this
paragraph), applied by substituting `dollars'
for `monetary value' each place it appears in
such section), and
``(ii) to the extent provided by the
Secretary to prevent abuse, any stablecoin
similar to a payment stablecoin described in
clause (i).
``(C) Publication of list.--The Secretary shall, to
the extent feasible, regularly publish a list of
qualified U.S. dollar stablecoins.
``(D) Limited authority to treat stablecoins as
money.--The Secretary may issue such regulations or
other guidance as may be necessary or appropriate to
(except as otherwise expressly provided in this
title)--
``(i) treat qualified U.S. dollar
stablecoins as dollars, and
``(ii) treat payment stablecoins (as
defined in section 2(22) of the GENIUS Act, as
in effect on the date of the enactment of this
paragraph) other than qualified U.S. dollar
stablecoins as currency if such treatment is
expected to increase net Federal revenues.
``(8) Digital asset transaction.--The term `digital asset
transaction' means any transfer of a digital asset recorded on
the cryptographically secured distributed ledger (or similar
technology) referred to in paragraph (1).
``(9) Digital asset validation supporting activities.--The
term `digital asset validation supporting activities' means
staking, mining, or, except as otherwise provided by the
Secretary, similar activities in support of the validation of
digital asset transactions.
``(10) Validation.--The term `validate', and any derivative
of such term (including `validation'), when used in connection
with a digital asset transaction, includes the processes of
proposing transactions for validation and verifying the
validation of transactions.
``(11) Staking.--The term `staking', when used in
connection with a digital asset, means--
``(A) making such asset available in support of the
validation of digital asset transactions, and
``(B) except as otherwise provided by the
Secretary, any substantially similar activity.
``(12) Mining.--The term `mining', when used in connection
with a digital asset, means--
``(A) performing computations, or making available
computing power, in support of the validation of
digital asset transactions, and
``(B) except as otherwise provided by the
Secretary, any substantially similar activity.''.
SEC. 602. REGULATIONS.
It is the sense of the Congress that the Secretary of the Treasury
should strongly consider issuing (under the authority of section 7805
of the Internal Revenue Code of 1986, or other applicable provisions of
such Code) regulations or other guidance to--
(1) provide simplified methods for determining basis in
digital assets,
(2) specify appropriate methods for determining the fair
market value of illiquid digital assets,
(3) provide for the appropriate application of section 954
of such Code with respect to digital assets, including digital
assets which are also securities or commodities,
(4) provide for the appropriate application of subpart J of
part III of subchapter N of chapter 1 of such Code (relating to
foreign currency transactions) to digital assets,
(5) clarify what constitutes the active conduct of a trade
or business of validating digital asset transactions (or
conducting staking, mining, or similar activities in support of
validating digital asset transactions),
(6) clarify the application of the provisions of such Code
to a digital asset that is also a security or commodity,
(7) clarify the treatment of tokenized digital assets, and
(8) clarify the circumstances under which any of the
following transactions constitute realization events:
tokenization transactions, wrapping transactions, unwrapping
transactions, forks, airdrops, and exchanges involving
liquidity pool tokens or staking pool tokens.
SEC. 603. RULES OF CONSTRUCTION.
(a) No Inference With Respect to Application of Other Provisions of
Law.--Except as otherwise expressly provided by this Act (or an
amendment made by this Act) with respect to the application of one or
more provisions of the Internal Revenue Code of 1986, nothing in this
Act (or any amendment made by this Act) shall be construed to create an
inference that a digital asset does or does not constitute a security,
a commodity, debt, equity, stock, a partnership interest, or an
interest in a trust, for purposes of any provision of law.
(b) No Inference With Respect to Prior Periods.--No provision of
this Act (or any amendment made by this Act) shall be construed to
create any inference with respect to the proper application of any
provision of the Internal Revenue Code of 1986 with respect to any
period before the period to which such provision or amendment applies.
TITLE VII--FULL HOUSE ACT
SEC. 701. REINSTATEMENT OF RULES FOR WAGERING LOSSES.
(a) In General.--Section 165(d) is amended to read as follows:
``(d) Wagering Losses.--Losses from wagering transactions shall be
allowed only to the extent of the gains from such transactions. For
purposes of the preceding sentence, the term `losses from wagering
transactions' includes any deduction otherwise allowable under this
chapter incurred in carrying on any wagering transaction.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2025.
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