(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:

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:

(c) Effective date

The amendments made by this section shall apply to the disposition of assets after December 31, 2027.

(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:

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:

(c) Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2027.

(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:

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:

(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.

(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—

(d) Conforming amendments

(e) Effective date

The amendments made by this section shall apply to transfers made after the date of the enactment of this Act.

(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—

(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

(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—

(i) Transitional coordination with wash sale rules

(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.

(a) In general

Section 864(b)(2) is amended—

(b) Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2025.

(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

(c) Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2026.

(a) In general

Section 1091 is amended—

(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

(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.

(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.

(a) In general

Section 954(c)(1)(B) is amended—

(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—

(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—

(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.

(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.

(a) Exception for qualified U.S. dollar stablecoins

Section 163(f)(2)(A) is amended—

(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

(a) Application of worthless asset rules

(b) Application of rules for 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.

(a) Distributions of traded digital assets from a partnership to a partner

(b) Traded digital assets taken into account in determining investment company status

(c) Certain stablecoin lending treated as indebtedness

(d) Digital assets not treated as section 197 intangibles

(e) Application of straddle rules to traded digital assets, etc

(f) Backup withholding on illiquid digital assets paid for digital asset validation supporting activities

(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

(c) Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

(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.

(a) In general

(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.

(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—

(c) Benefits

If the remedial requirements described in subsection (b) have been fulfilled to the satisfaction of the Secretary—

(d) Definitions

For purposes of this section—

(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).

(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—

(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—

(d) Secretary

For purposes of this section, the term Secretary means the Secretary of the Treasury or the Secretary’s delegate.

(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.

(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.

(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.

(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.