(a) Short title

This Act may be cited as the Applying Existing Tax Anti-Abuse Rules to Digital Assets 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:

(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 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 digital asset if such tokenized digital asset (or such wrapped digital asset) is economically equivalent to such stock, security, or 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 acquired in connection with validation of digital asset transactions

Section 1091, as amended by subsection (b), is amended by adding at the end the following new subsection:

(h) Exception for certain acquisitions of digital assets acquired in connection with the validation of digital asset transactions

The acquisition of a digital asset shall not be taken into account under this section if such digital asset is acquired in connection with the validation of digital asset transactions (including digital asset validation supporting activities).

(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 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.

(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

The term traded digital asset means, except as otherwise provided by the Secretary to prevent abuse, any digital asset if—

(A)

such asset is fungible,

(B)

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

(C)

such asset is either—

(i)

not a tokenized digital asset, or

(ii)

a wrapped digital asset with respect to which the reference 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 if, and only if, the reference digital asset with respect to such wrapped digital asset is a widely traded digital asset.

(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

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 related to anything other than the operation of the cryptographically secured distributed ledger on which such digital asset is recorded.

(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 (4)(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 which is issued by—

(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) which is permitted under such Act (as so in effect) to offer, sell, or otherwise make available such U.S. dollar stablecoin in the United States.

(B) U.S. dollar stablecoin

The term U.S. dollar stablecoin means 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.

(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 other stablecoins as currency if such treatment would increase 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 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.

(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.