H.R. 10357
Digital Asset Tax Certainty Act
Official summary
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Text of the bill
I Removing tax barriers to the use of digital assets as a medium of exchange
II Providing parity between digital assets and comparable traditional financial assets
(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—
(1) in the heading, by striking or commodities and inserting , commodities, or covered digital assets,
(2) by redesignating paragraph (3) as paragraph (4) and by inserting after paragraph (2) the following new paragraph:
(3) Traders in covered digital assets. 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.
, and
(3) in paragraph (4), as so redesignated, by striking paragraphs (1) and (2) and inserting paragraphs (1), (2), and (3).
(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
(1) Section 475(e)(2) is amended by striking this subsection and subsection (f) and inserting this section.
(2) The heading of section 475 is amended by striking dealers in securities and inserting certain dealers and traders.
(3) 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:
Sec. 475. Mark to market accounting method for certain dealers and traders.
(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—
(1) 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
(2) 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.
(i) Transitional coordination with wash sale rules
(1) In general. 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) for the taxpayer’s first taxable year beginning after the date of the enactment of this Act and before January 1, 2028, section 1091 shall be applied without regard to any specified transaction made by the taxpayer during the preceding taxable year if the taxpayer does not, during such first taxable year, identify under section 475(b)(2) of such Code any built-in-gain security as being described in subparagraph (A) of section 475(b)(1) of such Code.
(2) Specified transaction. For purposes of this subsection, the term specified transaction means any acquisition or disposition of a covered digital asset (as defined in section 475(g) of such Code) made in the ordinary course of the taxpayer’s activity as a dealer or trader, as the case may be.
(3) Built-in-gain security. For purposes of this subsection, the term built-in-gain security means any security if (as of the time of the identification referred to in paragraph (1)) the fair market value of such security exceeds the adjusted basis of such security.
(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.
III Applying existing tax anti-abuse rules to digital assets
IV Clarifying the tax treatment of mining and staking
V Ensuring that owners and users of digital assets face an appropriate tax compliance burden
VI Definitions; regulations; rules of construction
VII Full House Act