Applying Existing Tax Anti-Abuse Rules to Digital Assets Act

This Act may be cited as the Applying Existing Tax Anti-Abuse Rules to Digital Assets Act.
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.
The table of contents for this Act is as follows:
Section 1091 is amended—
by striking stock or securities each place it appears and inserting specified assets, and
by striking shares of each place it appears.
Section 1091 is amended by adding at the end the following new subsection:
For purposes of this section—
The term specified asset means—
any stock or security, and
any digital asset other than a qualified U.S. dollar stablecoin.
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).
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.
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.
Section 1091, as amended by subsection (b), is amended by adding at the end the following new subsection:
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).
Section 1091(a) is amended by striking the last sentence.
Section 1091(e) (as amended by subsection (a)) is amended to read as follows:
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—
substantially identical specified assets were sold, or
another short sale of (or specified asset futures contracts to sell) substantially identical specified assets was entered into.
The heading of section 1091 is amended by striking stock or securities and inserting specified assets.
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.
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.
Section 312(f)(1) is amended by striking stock or securities and inserting specified assets.
Section 1256(f)(5) is amended by striking stock or securities and inserting specified assets.
Section 6045(g)(2)(B)(ii) is amended—
by striking stock or securities and inserting specified assets, and
by striking identical securities and inserting identical specified assets.
The amendments made by this section shall apply to dispositions after the date of the introduction of this Act.
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.
Section 1259(b)(1) is amended by inserting , digital asset (other than a qualified U.S. dollar stablecoin) after debt instrument.
Section 1259(c)(2) is amended by inserting or widely traded digital asset after marketable security (as defined in section 453(f)).
Section 1259(c) is amended by adding at the end the following new paragraph:
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.
Section 1259(e) is amended by adding at the end the following new paragraph:
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.
The amendments made by this section shall apply to constructive sales after the date of the introduction of this Act.
Section 7701 is amended—
by redesignating subsection (p) as subsection (q), and
by inserting after subsection (o) the following new subsection:
For purposes of this title—
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.
The term traded digital asset means, except as otherwise provided by the Secretary to prevent abuse, any digital asset if—
such asset is fungible,
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
such asset is either—
not a tokenized digital asset, or
a wrapped digital asset with respect to which the reference digital asset is a traded digital asset.
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—
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,
the market capitalization of such asset exceeded $500,000,000 at substantially all times during such calendar year, and
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.
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.
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.
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.
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—
such dollar amount, multiplied by
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.
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.
The term wrapped digital asset means, except as otherwise provided by the Secretary to prevent abuse, any digital asset if such asset—
is redeemable on demand, on a one-for-one basis, for another digital asset, and
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.
The term reference digital asset means, with respect to any wrapped digital asset, the digital asset referred to in paragraph (4)(A).
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)—
subparagraph (A) shall be applied with respect to such lower-tier wrapped digital asset, and
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.
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.
The term qualified U.S. dollar stablecoin means any U.S. dollar stablecoin which is issued by—
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
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.
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.
The Secretary shall, to the extent feasible, regularly publish a list of qualified U.S. dollar stablecoins.
The Secretary may issue such regulations or other guidance as may be necessary or appropriate to (except as otherwise expressly provided in this title)—
treat qualified U.S. dollar stablecoins as dollars, and
treat other stablecoins as currency if such treatment would increase Federal revenues.
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).
The term digital asset validation supporting activities means staking, mining, or similar activities in support of the validation of digital asset transactions.
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.
The term staking, when used in connection with a digital asset, means—
making such asset available in support of the validation of digital asset transactions, and
except as otherwise provided by the Secretary, any substantially similar activity.
The term mining, when used in connection with a digital asset, means—
performing computations, or making available computing power, in support of the validation of digital asset transactions, and
except as otherwise provided by the Secretary, any substantially similar activity.
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.
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.