PAR Act

This Act may be cited as the Providing Analogous Rules for Digital Assets Act or the PAR 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:
Subsections (a) and (b) of section 1058 are each amended by striking securities each place it appears and inserting specified assets.
Section 1058 is amended by adding at the end the following new subsection:
For purposes of this section, the term specified assets means—
securities (as defined in section 1236(c)), and
traded digital assets.
Section 1058(b)(2) is amended to read as follows:
require that—
payments shall be made to the transferor of amounts equivalent to, except as otherwise provided by the Secretary, all interest, dividends, property, legal entitlements, and other distributions which the owner of the specified assets is entitled to receive during the period beginning with the transfer of the specified assets by the transferor and ending with the transfer of identical specified assets back to the transferor, and
in the case of any transfer of traded digital assets, the transferor shall assume all obligations imposed on the owner of such traded digital assets during the period described in subparagraph (A),
Section 1058(a) is amended by striking (as defined in section 1236(c)).
The heading of section 1058, and the item relating to section 1058 in the table of sections for part IV of subchapter O of chapter 1, are each amended by striking securities and inserting specified assets.
The amendments made by this section shall apply to transfers made after the date of the enactment of this Act.
Section 475 is amended by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection:
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.
For purposes of this section, the term covered digital asset means—
any widely traded digital asset,
any notional principal contract with respect to any widely traded digital asset,
any evidence of an interest in, or a derivative instrument in, any widely traded digital asset described in subparagraph (A) or (B), including any option, forward contract, futures contract, short position, and any similar instrument in such widely traded digital asset, and
any position which—
is not a covered digital asset described in subparagraph (A), (B), or (C),
is a hedge with respect to such a covered digital asset, and
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).
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.
Section 475(f) is amended—
in the heading, by striking or commodities and inserting , commodities, or covered digital assets,
by redesignating paragraph (3) as paragraph (4) and by inserting after paragraph (2) the following new paragraph:
In the case of a person who is engaged in a trade or business as a trader in covered digital assets and who elects to have this paragraph apply to such trade or business, paragraph (1) shall apply to covered digital assets held by such trader in connection with such trade or business in the same manner as paragraph (1) applies to securities held by a trader in securities.
in paragraph (4), as so redesignated, by striking paragraphs (1) and (2) and inserting paragraphs (1), (2), and (3).
Section 475(d) is amended by adding at the end the following new paragraph:
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).
Section 475(d), as amended by subsection (c), is amended by adding at the end the following new paragraph:
In the case of an adjustment described in section 481(a) by reason of the application of 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.
Section 475(e)(2) is amended by striking this subsection and subsection (f) and inserting this section.
The heading of section 475 is amended by striking dealers in securities and inserting certain dealers and traders.
The table of sections for subpart D of part II of subchapter E of chapter 1 is amended by striking the item relating to section 475 and inserting the following:
The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
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—
any identification required with respect to such subsection with respect to covered digital assets held on the first day of such taxable year shall be treated as timely made if made on or before the 30th day of such taxable year, and
the net amount of the adjustments required to be taken into account by the taxpayer under section 481 of such Code by reason of such subsection shall be taken into account ratably over the 4-taxable year period beginning with such taxable year.
Section 864(b)(2) is amended—
in the heading, by striking or commodities and inserting commodities, or traded digital assets,
by redesignating subparagraph (C) as subparagraph (D) and by inserting the following new subparagraph after subparagraph (B):
Trading in traded digital assets through a resident broker, commission agent, custodian, or other independent agent.
Trading in traded digital assets for the taxpayer's own account, whether by the taxpayer or his employees or through a resident broker, commission agent, custodian, or other agent, and whether or not any such employee or agent has discretionary authority to make decisions in effecting the transactions. This clause shall not apply in the case of a dealer in digital assets.
in subparagraph (D), as so redesignated, by striking and (B)(i) and inserting , (B)(i), and (C)(i).
The amendments made by this section shall apply to taxable years beginning after December 31, 2025.
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 (5)(A).
If, but for this clause, 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.
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.