H.R. 9178

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 9178 Introduced in House (IH)]

<DOC>

119th CONGRESS
2d Session
H. R. 9178

To amend the Internal Revenue Code of 1986 to reduce certain tax 
compliance burdens with respect to digital asset ownership, and for 
other purposes.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

June 8, 2026

Mr. Yakym introduced the following bill; which was referred to the 
Committee on Ways and Means

_______________________________________________________________________

A BILL

To amend the Internal Revenue Code of 1986 to reduce certain tax 
compliance burdens with respect to digital asset ownership, and for 
other purposes.

Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; ETC.

(a) Short Title.--This Act may be cited as the ``Less Tax Paperwork 
for Digital Asset Owners 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:

Sec. 1. Short title; etc.
Sec. 2. Treatment of de minimis digital asset network fees.
Sec. 3. Simplified accounting for gain and loss on widely traded 
digital assets.
Sec. 4. Treatment of U.S. dollar stablecoin transactions.
Sec. 5. Broker requirements.
Sec. 6. Definitions.

SEC. 2. TREATMENT OF DE MINIMIS DIGITAL ASSET NETWORK FEES.

(a) In General.--Part III of subchapter O of chapter 1 of subtitle 
A is amended by inserting after section 1043 the following new section:

``SEC. 1044. DE MINIMIS NETWORK FEE EXCEPTION.

``(a) In General.--No gain or loss shall be recognized on the 
disposition of a digital asset in payment of a de minimis network fee.
``(b) De Minimis Network Fee.--For purposes of this section--
``(1) In general.--The term `de minimis network fee' means 
an amount paid or incurred in a digital asset transaction to 
validate another digital asset transaction if the aggregate 
amount so paid or incurred with respect to the validation of 
such other digital asset transaction does not exceed $10.
``(2) Network fee.--The term `network fee' means any amount 
which would be a de minimis network fee if paragraph (1) were 
applied without regard to the dollar limitation specified 
therein.
``(c) Disposition of Digital Asset Used To Pay Network Fee.--For 
purposes of this section--
``(1) a disposition of a digital asset shall not fail to be 
treated as a payment merely because such asset is not received 
by another person, and
``(2) any payment of a network fee using a digital asset 
shall be treated as a disposition of such asset in exchange for 
consideration equal to the fair market value of such digital 
asset.
``(d) Treatment of Unrecognized Gain.--The amount of any network 
fee which would otherwise be taken into account in determining the 
amount of gain or loss on the disposition of any asset, in determining 
the amount of any deduction, or in determining the basis of any asset 
acquired, shall be reduced by the amount of any gain not recognized by 
reason of subsection (a) with respect to the disposition of the digital 
asset used to pay such network fee.
``(e) Exclusions.--
``(1) Trade or business.--
``(A) In general.--Subsection (a) shall not apply 
to the disposition of a digital asset by--
``(i) a trader, broker, or dealer in 
digital assets,
``(ii) a person in the trade or business of 
batching or facilitating the validation of 
digital asset transactions on behalf of others,
``(iii) to the extent provided by the 
Secretary, any person in a trade or business 
which is substantially similar to a trade or 
business described in clause (i) or (ii), or
``(iv) any person that engaged in more than 
5,000 digital asset transactions during the 
preceding taxable year.
``(B) Administrative convenience exception.--
``(i) In general.--Subparagraph (A) shall 
not apply to any taxpayer that demonstrates to 
the Secretary that such taxpayer is of a type 
with respect to which not applying subparagraph 
(A) will not result in a substantial Federal 
revenue loss.
``(ii) Guidance.--The Secretary shall issue 
guidance that--
``(I) identifies different types of 
taxpayers with respect to which not 
applying subparagraph (A) will not 
result in substantial Federal revenue 
loss, and
``(II) specifies with respect to 
each such type of taxpayer the 
information that such taxpayer must 
provide to make the demonstration 
described in clause (i).
``(iii) Certain factors required to be 
taken into account.--The guidance issued by the 
Secretary under clause (ii) shall--
``(I) for purposes of determining 
the classification of types of 
taxpayers, and whether any Federal 
revenue loss from not applying 
subparagraph (A) with respect to any 
such type of taxpayer would be 
substantial, take into account the 
method or methods used by such type of 
taxpayer for selecting the digital 
assets used to pay network fees and the 
average holding period of such digital 
assets by such type of taxpayer, and
``(II) determine Federal revenue 
loss by reducing such loss by a 
reasonable approximation of the 
additional administrative costs of the 
Department of the Treasury, and the 
additional compliance costs of such 
type of taxpayer (and any person who 
would be required to make additional 
information return reporting with 
respect to such type of taxpayer), 
which would be imposed if subparagraph 
(A) did not apply to such type of 
taxpayer.
``(2) Certain accounting methods.--Subsection (a) shall not 
apply to any digital asset--
``(A) to which section 475, 1051(a), or 1256(a), or
``(B) except as otherwise provided by the 
Secretary, to which a mark-to-market method applies 
under any other provision of this subtitle.
``(f) Regulations.--The Secretary shall issue such regulations or 
other guidance as may be necessary or appropriate to carry out the 
purposes of this section, including regulations or guidance to prevent 
the abuse of this section through--
``(1) transaction structuring for the purpose of qualifying 
for the exclusion provided in subsection (a), and
``(2) the receipt of any value other than the validation of 
a digital asset transaction in exchange for a network fee.''.
(b) Clerical Amendment.--The table of sections for part III of 
subchapter O of chapter 1 of subtitle A is amended by inserting after 
the item relating to section 1043 the following new item:

``Sec. 1044. De minimis network fee exception.''.
(c) Effective Date.--The amendments made by this section shall 
apply to the disposition of assets after December 31, 2027.

SEC. 3. SIMPLIFIED ACCOUNTING FOR GAIN AND LOSS ON WIDELY TRADED 
DIGITAL ASSETS.

(a) In General.--Part IV of subchapter O of chapter 1 of subtitle A 
is amended by inserting before section 1052 the following new section:

``SEC. 1051. ELECTION TO APPLY SIMPLIFIED ACCOUNTING FOR GAIN AND LOSS 
ON WIDELY TRADED DIGITAL ASSETS.

``(a) In General.--In the case of any designated type of digital 
asset with respect to any taxpayer for any taxable year--
``(1) such taxpayer shall recognize gain on such designated 
type of digital asset for such taxable year equal to the excess 
(if any) of--
``(A) the sum of--
``(i) the aggregate amount realized by the 
taxpayer on sales or exchanges (including 
nonrecognition transactions) of widely traded 
digital assets of such designated type during 
such taxable year,
``(ii) in the case of dispositions 
(including nonrecognition transactions), other 
than sales or exchange described in clause (i), 
of widely traded digital assets of such 
designated type, the fair market value of such 
widely traded digital assets (determined as of 
the time of such dispositions), and
``(iii) the fair market value of widely 
traded digital assets of such designated type 
held by such taxpayer as of the close of the 
taxable year, over
``(B) the sum of--
``(i) the fair market value of 
consideration provided by the taxpayer for the 
acquisition of widely traded digital assets of 
such designated type during the taxable year,
``(ii) in the case of any disposition 
described in subparagraph (A)(ii), any amounts 
which would have reduced the amount realized by 
the taxpayer on such disposition if such 
disposition had been a sale or exchange,
``(iii) in the case of the acquisition of 
widely traded digital assets of such designated 
type during the taxable year the basis of which 
in the hands of the taxpayer are determined by 
reference to the basis of such assets in the 
hands of the transferor, the basis of such 
assets in the hands of the taxpayer immediately 
after such acquisition, and
``(iv) the fair market value of widely 
traded digital assets of such designated type 
held by such taxpayer as of the close of the 
preceding taxable year,
``(2) such taxpayer shall recognize loss on such designated 
type of digital asset for such taxable year equal to the excess 
(if any) of--
``(A) the amount described in paragraph (1)(B), 
over
``(B) the amount described in paragraph (1)(A), and
``(3) except as provided in paragraph (1) and (2), such 
taxpayer shall not recognize any gain or loss on the 
disposition of widely traded digital assets of such designated 
type.
``(b) Designated Type of Digital Asset.--For purposes of this 
section--
``(1) In general.--The term `designated type of digital 
asset' means, with respect to any taxpayer for any taxable 
year, any type of widely traded digital asset with respect to 
which such taxpayer elects the application of this section for 
such taxable year.
``(2) Type of widely traded digital asset.--Widely traded 
digital assets shall be treated as being of the same type if, 
and only if--
``(A) such assets are fungible, or
``(B) such assets are determined under rules 
provided by the Secretary to have values that are 
directly linked or highly correlated.
``(c) Gain or Loss Treated as Short-Term.--Any gain or loss 
determined under subsection (a) shall be treated as short-term capital 
gain or short-term capital loss, respectively.
``(d) Treatment of Lending Transactions.--
``(1) Certain lending agreements.--In the case of any 
transfer of widely traded digital assets to which section 
1058(a) applies, such assets shall be treated for purposes of 
this section as continuing to be held by the transferor.
``(2) Other lending transactions.--In the case of any loan 
of widely traded digital assets which is not described in 
paragraph (1), except as otherwise provided by the Secretary, 
such assets shall be treated for purposes of this section as 
continuing to be held by the lender.
``(e) Election.--
``(1) Application of election.--An election under this 
section with respect to any designated type of digital asset 
shall apply to the first taxable year which begins after the 
date on which the taxpayer makes such election and to each 
taxable year thereafter unless revoked as provided in paragraph 
(3).
``(2) Partnerships and s corporations.--In the case of any 
partnership or S corporation, the election under this section 
shall be made at the partnership or S corporation level.
``(3) Revocation.--
``(A) In general.--A taxpayer may revoke an 
election under this section with respect to a taxable 
year which--
``(i) has not begun as of the date on which 
such taxpayer requests such revocation, and
``(ii) is not one of the first 5 taxable 
years to which such election applies.
``(B) Deemed revocation.--In the case of any 
designated type of digital asset which has ceased to be 
a widely traded digital asset, the election under this 
section with respect to such designated type shall be 
treated as revoked with respect to the first taxable 
year beginning after the date on which such designated 
type ceases to be a widely traded digital asset.
``(C) 5-year waiting period.--In the case of any 
revocation under this paragraph with respect to any 
designated type of digital asset, the taxpayer may not 
make an election under this section with respect to 
such designated type if such election would apply to 
any of the first 5 taxable years to which such 
revocation applies.
``(D) Special rule for traders making mark-to-
market election.--If a taxpayer has in effect one or 
more elections under this section with respect to 
designated types of digital assets and such taxpayer 
makes the election under section 475(f)(3) with respect 
to any taxable year, the taxpayer shall 
(notwithstanding subparagraph (A)) be treated as 
revoking all such elections under this section 
beginning with such taxable year.
``(f) Transition Rules Related to Election, Revocation, and Certain 
Transfers.--
``(1) Transition rule for election.--In the case of an 
election under this section, with respect to any designated 
type of digital asset, any widely traded digital assets of such 
designated type held by the taxpayer shall be treated as sold 
for fair market value on the last day of the taxable year 
preceding the first taxable year to which such election 
applies.
``(2) Transition rule for revocation.--In the case of a 
revocation of an election under this section, proper adjustment 
shall be made in the amount of any gain or loss subsequently 
realized for gain or loss taken into account under subsection 
(a).
``(3) Transition rule for certain transfers.--In the case 
of any transfer of a widely traded digital asset which is a 
designated type of digital asset with respect to the transferor 
for the taxable year in which the transfer occurs, if the basis 
of such asset in the hands of the transferee is determined by 
reference to the basis of such asset in the hands of the 
transferor, the basis of such asset in the hands of the 
transferor (solely for purposes of determining the basis of 
such asset in the hands of the transferee) shall be treated as 
being equal to the fair market value of such asset at the time 
of such transfer.
``(g) Coordination With Certain Other Provisions.--
``(1) Determined without regard to wash and constructive 
sale rules.--Sections 1091 and 1259 shall not apply to any 
transaction with respect to which gain or loss is not 
recognized by reason of subsection (a)(3).
``(2) Coordination with related party transaction rules.--
Section 267 shall not apply with respect to a sale or exchange 
of property if the transferor has an election in effect under 
this section for the taxable year with respect to such 
property.
``(3) Nonrecognition provisions to not apply.--In the case 
of any transfer of a widely traded digital asset which is not a 
designated type of digital asset with respect to the transferor 
for the taxable year of the transferor in which the transfer 
occurs but which is a designated type of digital asset with 
respect to the transferee for the taxable year of the 
transferee in which the transfer occurs, if the transferor and 
transferee are described in section 267(b) (applied without 
regard to section 267(c)(3)) or section 707(b)(1), gain or loss 
shall be recognized on such transfer notwithstanding any other 
provision of this title.
``(h) Clarification That Certain Transfers Are Treated as 
Dispositions.--The following shall not fail to be treated as a 
disposition for purposes of this section:
``(1) The distribution of any digital asset from a trust to 
a beneficiary.
``(2) The transfer of any digital asset from a decedent 
(whether or not incident to the decedent's death).
``(i) Regulatory Authority.--The Secretary shall prescribe such 
regulations or other guidance as may be necessary or appropriate to 
carry out the purposes of this section, including regulations or 
guidance relating to--
``(1) the form and manner of making an election or 
revocation under this section,
``(2) adjustments necessary by reason of such election or 
revocation,
``(3) adjustments to reporting requirements relating to 
widely traded digital assets with respect to which an election 
is in effect under this section,
``(4) the treatment of a derivative of a designated type of 
digital asset, and
``(5) preventing abuse of this section.''.
(b) Clerical Amendment.--The table of sections for part III of 
subchapter O of chapter 1 of subtitle A is amended by inserting before 
the item relating to section 1052 the following new item:

``Sec. 1051. Election to apply simplified accounting for gain and loss 
on widely traded digital assets.''.
(c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2027.

SEC. 4. TREATMENT OF U.S. DOLLAR STABLECOIN TRANSACTIONS.

(a) In General.--Part IV of subchapter O of chapter 1 of subtitle A 
is amended by redesignating section 1063 as section 1064 and by 
inserting after section 1062 the following new section:

``SEC. 1063. CERTAIN U.S. DOLLAR STABLECOIN TRANSACTIONS.

``(a) Treatment of Acquisitions of U.S. Dollar Stablecoins.--
``(1) Determination of basis.--The basis of any qualified 
U.S. dollar stablecoin acquired by a taxpayer in any sale or 
exchange shall be the redemption value of such stablecoin. The 
preceding sentence shall not apply if it is unreasonable under 
the facts and circumstances to conclude that the value of the 
consideration provided for such stablecoin in such sale or 
exchange is not less than 99.5 percent of such redemption 
value.
``(2) Treatment of consideration provided in exchange.--For 
purposes of this title, in the case of any consideration other 
than money provided in exchange for a qualified U.S. dollar 
stablecoin, the income, gain, or loss resulting from the 
provision of such consideration shall be determined by treating 
the value of such qualified U.S. dollar stablecoin as being 
equal to the redemption value of such stablecoin. The preceding 
sentence shall not apply if it is unreasonable under the facts 
and circumstances to conclude that the value of such stablecoin 
is not less than 99.5 percent, and not more than 100.5 percent, 
of such redemption value.
``(b) Treatment of Sale or Exchange of Qualified U.S. Dollar 
Stablecoins.--
``(1) Determination of gain or loss.--If the taxpayer's 
basis in any qualified U.S. dollar stablecoin was determined 
under subsection (a)(1), gain or loss on such taxpayer's sale 
or exchange of such stablecoin shall be determined as though 
such stablecoin were sold or exchanged for the redemption value 
of such stablecoin. The preceding sentence shall not apply if 
it is unreasonable under the facts and circumstances to 
conclude that the value of the consideration received for such 
stablecoin in such sale or exchange is not more than 100.5 
percent of such redemption value.
``(2) Treatment of consideration received in exchange.--For 
purposes of this title, in the case of any consideration other 
than money received in exchange for a qualified U.S. dollar 
stablecoin, the cost of (and amount paid or incurred for) such 
consideration shall be determined by treating the value of such 
qualified U.S. dollar stablecoin as being equal to the 
redemption value of such stablecoin. The preceding sentence 
shall not apply if it is unreasonable under the facts and 
circumstances to conclude that the value of such stablecoin is 
not less than 99.5 percent, and not more than 100.5 percent, of 
such redemption value.
``(c) Exceptions.--
``(1) In general.--Subsections (a) and (b) shall not apply 
with respect to any taxpayer for any taxable year if such 
taxpayer is--
``(A) a trader, broker, or dealer in qualified U.S. 
dollar stablecoins,
``(B) to the extent provided by the Secretary, any 
person in a trade or business which is substantially 
similar to a trade or business described in 
subparagraph (A), or
``(C) any other person who in the preceding taxable 
year engaged in more than 5,000 transactions to which 
subsection (a) or (b) applied, determined without 
regard to--
``(i) any such transaction which is 
predominantly with respect to a trade or 
business (other than a trade or business 
described in subparagraph (A) or (B)), 
including the acceptance of qualified U.S. 
dollar stablecoins at redemption value as a 
payment for goods or services in such trade or 
business and the use of qualified U.S. dollar 
stablecoins at redemption value to acquire 
goods and services for use in such trade or 
business, and
``(ii) any such transaction which is a sale 
(for money) of a qualified U.S. dollar 
stablecoin at or below redemption value.
``(2) Functional currency other than the dollar.--
Subsections (a) and (b) shall not apply to any taxpayer or 
qualified business unit (as defined in section 989(a)) that 
uses a functional currency other than the dollar.
``(3) Related parties.--In the case of any sale or exchange 
between persons described in section 267(b) (applied without 
regard to section 267(c)(3)) or section 707(b)(1)--
``(A) subsections (a)(1), (a)(2), and (b)(2) shall 
be applied by substituting `100 percent' for `99.5 
percent', and
``(B) subsections (a)(2), (b)(1), and (b)(2) shall 
be applied by substituting `100 percent' for `100.5 
percent'.
``(d) Redemption Value.--For purposes of this section, the term 
`redemption value' means, with respect to a qualified U.S. dollar 
stablecoin, the dollar amount for which the issuer is obligated to 
convert, redeem, or repurchase such stablecoin.
``(e) Regulations.--The Secretary shall issue such regulations or 
other guidance as may be necessary or appropriate to carry out the 
purposes of this section, including regulations or other guidance--
``(1) describing the factors considered, and documentation 
or substantiation required, with respect to the facts and 
circumstances tests described in subsections (a)(1), (a)(2), 
(b)(1), and (b)(2),
``(2) providing for the application of subsection (c)(1) 
with respect to a portion of a taxable year if the taxpayer 
only regularly purchases, exchanges, or sells qualified U.S. 
dollar stablecoins for profit for a portion of such taxable 
year, and
``(3) to prevent abuse of this section.''.
(b) Clerical Amendment.--The table of sections for part IV of 
subchapter O of chapter 1 of subtitle A is amended by redesignating the 
item relating to section 1063 as an item relating to section 1064 and 
by inserting after the item relating to section 1062 the following new 
item:

``Sec. 1063. Certain U.S. dollar stablecoin transactions.''.
(c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2026.

SEC. 5. BROKER REQUIREMENTS.

(a) In General.--
(1) Exception for qualified u.s. dollar stablecoins 
acquired at redemption value.--Section 6045(g)(3)(D) is amended 
to read as follows:
``(D) Specified digital asset.--The term `specified 
digital asset' means any digital asset other than a 
qualified U.S. dollar stablecoin the customer's basis 
in which at the time of acquisition is at least 99.5 
percent of such stablecoin's redemption value (as 
defined in section 1063(e)).''.
(2) Conforming amendments.--
(A) Section 6045(c)(1)(D) is amended by striking 
``digital assets'' and inserting ``specified digital 
assets''.
(B) Subparagraph (B)(iv) and subparagraph (C)(iii) 
of section 6045(g)(3) are each amended by striking 
``digital asset'' and inserting ``specified digital 
asset''.
(C) Section 6050I(d)(3) is amended by striking 
``(as defined in section 6045(g)(3)(D))''.
(b) Special Rules for Digital Assets Used To Pay De Minimis 
Validation Fee.--Section 6045(g) is amended by adding at the end the 
following new paragraph:
``(7) Special rules for digital assets used to pay de 
minimis validation fee.--
``(A) In general.--Except as otherwise provided by 
the Secretary, in the case of the disposition of a 
digital asset with respect to which no gain or loss is 
recognized by reason of section 1044(a)--
``(i) except as provided in clause (ii), 
subsection (a) shall not apply to such 
disposition, and
``(ii) the broker shall include in a return 
under subsection (a) such aggregate information 
relating to such dispositions of the taxpayer 
as the Secretary determines necessary or 
appropriate, including for purposes of 
verifying the taxpayer's basis in digital 
assets held by the taxpayer.
``(B) Application of de minimis exception.--If the 
broker has been notified by the taxpayer or the 
Secretary that the exception described in section 
1044(e)(1)(B) applies to such taxpayer, the broker may 
treat such exception as continuing to apply with 
respect to such taxpayer for any calendar year 
(hereafter in this subparagraph referred to as the 
`current calendar year') unless--
``(i) such taxpayer had more than 5,000 
digital asset transactions with such broker 
during any of the 5 preceding calendar years 
and the taxpayer has not notified the broker 
that such exception applies to such taxpayer 
for the current calendar year,
``(ii) such taxpayer or the Secretary 
notifies such broker that such exception does 
not apply to such taxpayer, or
``(iii) such broker otherwise knows, or has 
reason to know, that such exception does not 
apply to such taxpayer.''.
(c) Special Rules for Simplified Accounting for Widely Traded 
Digital Assets.--Section 6045(g), as amended by subsection (b), is 
amended by adding at the end the following new paragraph:
``(8) Special rules for simplified accounting for widely 
traded digital assets.--
``(A) In general.--Except as otherwise provided by 
the Secretary, in the case of widely traded digital 
assets with respect to which an election under section 
1051 applies--
``(i) except as provided in clause (ii), 
subsection (a) shall not apply to dispositions 
of such assets, and
``(ii) the broker shall include in a return 
under subsection (a) such information with 
respect to each desginated type of such assets 
(within the meaning of section 1051) as the 
Secretary may provide, including--
``(I) aggregate reporting with 
respect to sales, exchanges, 
dispositions, and acquistions of assets 
of such designated type (including net 
gain or loss thereon),
``(II) the fair market value of 
assets of such designated type held by 
the taxpayer as of the beginning and 
end of the calendar year, and
``(III) such other information as 
the Secretary may require with respect 
to assets of such designated type for 
purposes of the administration of 
section 1051.
``(B) Determination of election based on broker 
notification.--For purposes of subparagraph (A), the 
broker shall take into account any election under 
section 1051 (and any revocation of such election) if 
(and only if) the taxpayer or the Secretary notifies 
such broker of such election (or revocation) or such 
broker otherwise knows, or has reason to know, of such 
election (or revocation).''.
(d) Effective Date.--The amendments made by this section shall 
apply to returns required to be filed, and statements required to be 
furnished, after December 31, 2027.

SEC. 6. DEFINITIONS.

Section 7701 is amended--
(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 
(5)(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) 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.''.
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