Summary#
This bill amends the Internal Revenue Code to set tax rules for many digital asset activities. It creates special tax treatment for certain stablecoins, adds safe harbors for digital asset trading, treats lending and substitute payments from lending as taxable, extends wash sale rules to digital assets, allows a mark-to-market election for dealers and traders in actively traded digital assets, applies constructive sale rules to digital assets, sets rules for digital assets received from validation activities (like staking or mining), updates charitable contribution rules for donated digital assets, and requires a Treasury study and report on small consumer digital asset transactions. The bill also adds many definitions (for example, "digital asset," "actively traded digital asset," "staking," and "mining") and gives the Secretary of the Treasury authority to issue regulations and guidance. Different sections have different effective dates; some start for taxable years beginning after December 31, 2025, and others start on the date of enactment.
What it means for you#
- Stablecoins that meet the bill's definition may not produce taxable gain or loss on sale or exchange unless the holder's basis is less than 99% of the stablecoin's redemption value. The bill says an acquirer's basis in such a stablecoin is treated as $1. Transaction fees to facilitate sales are excluded from basis calculations.
- Trading digital assets through a resident broker, agent, or exchange may qualify for a sourcing safe harbor under the amended tax rules.
- If you lend digital assets, substitute payments you receive in lieu of staking rewards or other protocol distributions must be included in gross income as if you received them directly.
- Losses from sales of digital assets may be subject to wash sale rules because the bill expands those rules to cover digital assets and related contracts or options. The bill also says whether assets are "substantially identical" should be based on economic exposure.
- Dealers and traders in actively traded digital assets may elect mark-to-market treatment similar to securities dealers and traders, subject to rules the Treasury issues.
- People who validate transactions (for example, validators who receive newly created digital assets) generally must include the fair market value of newly created assets in income when acquired, unless they make a specific election to defer income and capitalize certain costs for up to five years.
- Charitable gifts of actively traded digital assets are added to existing charitable contribution rules. For infrequently traded digital assets with claimed values over $500, donors must provide detailed contemporaneous acknowledgments and the donee’s sale proceeds limit the deduction. The bill creates a penalty for organizations that knowingly provide false or missing acknowledgments.
- The bill states that passive staking is not a trade or business for certain tax purposes and clarifies treatment of powers and staking activities by trustees of digital asset investment trusts.
Expenses#
No publicly available information.
Proponents' View#
The bill includes a "sense of Congress" that taxpayers should not face undue compliance burdens for low-value digital asset consumer transactions, that any de minimis exclusion must preserve tax system integrity, and that relief should be administrable within existing IRS resources. Other supportive rationales or stakeholder views are not stated in the bill text.
Opponents' View#
No publicly available information.