H.R. 10357 — Digital Asset Tax Certainty Act

This section exempts from gain or loss recognition the disposition of a digital asset to pay a de minimis network fee or transaction fee of $10 or less. It excludes traders, brokers, dealers, persons in the business of validating digital asset transactions for others, and persons who made more than 5,000 digital asset transfers in the prior year, and directs the Secretary to issue regulations to prevent abuse.

This section allows taxpayers to elect simplified annual recognition of short-term capital gain or loss on designated types of widely traded digital assets (excluding qualified U.S. dollar stablecoins), calculated from aggregate realizations, year-end fair market values, acquisitions, and basis adjustments rather than per-transaction. It treats fungible or highly correlated assets as a single type, includes qualified pool token assets under ownership and control limits, and treats lent assets under section 1058 as remaining held by the transferor.

This section establishes that the basis of a qualified U.S. dollar stablecoin acquired in a sale or exchange equals its redemption value, and that gain or loss on its subsequent sale or exchange is determined as if the stablecoin were sold for that redemption value, provided the transaction value falls between 99.5 percent and 100.5 percent of redemption value. These rules apply to taxable years beginning after December 31, 2026, and do not apply to traders, brokers, dealers, or taxpayers who engaged in more than 5,000 such transactions in the prior year.

This section expands nonrecognition treatment for securities lending agreements to transfers of traded digital assets, defining specified assets as securities and traded digital assets. It requires agreements involving traded digital assets to provide payments equivalent to all property and legal entitlements received during the transfer period and to transfer all related obligations to the transferor. The changes apply to transfers made after the date of enactment.

This section allows dealers in covered digital assets to elect mark-to-market treatment under section 475, applying the same rules that govern securities held by securities dealers. It extends the election to traders in covered digital assets and defines those assets to include widely traded digital assets, qualified U.S. dollar stablecoins, qualified pool token assets, derivatives and notional principal contracts with respect to such assets, and identified hedges. The section also provides that a covered digital asset is not treated as a security or commodity for purposes of subsections (b) through (g), prescribes the character of section 481(a) adjustments arising from the election, and removes the exclusion for commodities from the definition of specified service trade or business under section 199A(d)(2)(B).

This section expands the safe harbor from treatment as a U.S. trade or business to include trading in traded digital assets through a resident broker, commission agent, custodian, staking service provider, or other independent agent, or for the taxpayer’s own account (except by dealers in digital assets). It applies to taxable years beginning after December 31, 2025, and provides that a traded digital asset is not treated as a security or commodity for these purposes.

This section exempts qualified U.S. dollar stablecoins and widely traded digital assets from the qualified appraisal requirement for charitable contribution deductions. It disallows deductions for contributions of other digital assets but provides nonrecognition of gain on their sale or exchange if all proceeds are contributed to charity within 7 days or by the close of the taxable year. The changes apply to taxable years beginning after December 31, 2026.

This section extends the wash sale loss disallowance rules to traded digital assets other than qualified U.S. dollar stablecoins. It treats tokenized or wrapped digital assets as substantially identical to economically equivalent stocks, securities, or traded digital assets, and exempts acquisitions made in connection with transaction validation or included as ordinary income. The rules apply to dispositions after the date of introduction of this Act, with a transition allowing adjusted basis to be determined without regard to wash sales for broker reporting before January 1, 2028.

This section applies the constructive sale rules of section 1259 to digital assets other than qualified U.S. dollar stablecoins, treating them as appreciated financial positions. It extends the nonpublicly traded property exception to widely traded digital assets, treats tokenized digital assets as substantially identical to any economically equivalent stock, debt instrument, or partnership interest, and excludes qualified U.S. dollar stablecoins from that definition for taxpayers or qualified business units using a non-dollar functional currency. The amendments apply to constructive sales after the date of introduction of this Act.

This section includes digital assets in foreign personal holding company income under subpart F. It treats income from staking, mining, or similar passive digital asset validation activities as foreign personal holding company income unless the controlled foreign corporation actively conducts a trade or business validating such transactions, substantially all its digital assets relate to that business, and substantially all activities occur in its country of organization. It also includes payments under digital asset lending agreements as foreign personal holding company income. The section provides a dealer exception for covered digital assets and directs the Treasury Secretary to issue regulations within 12 months clarifying reorganization of foreign decentralized autonomous organization entities as domestic corporations, including temporary safe harbors for pre-enactment entities. The changes apply to taxable years of foreign corporations ending after enactment.

This section requires specified possession resident individuals (U.S. citizens who are bona fide residents of Guam, American Samoa, the Northern Mariana Islands, Puerto Rico, or the Virgin Islands but were U.S. residents in any of the prior 10 years) to treat gains on traded digital asset property as U.S.-source income, except to the extent they report the assets' fair market value and basis and demonstrate the gain is attributable to periods of possession residency. It imposes a $10,000 de minimis exception, a transition reporting rule for assets held on January 1, 2027, and an election to mark widely traded digital assets to fair market value upon becoming a possession resident.

This section exempts qualified U.S. dollar stablecoins from registration requirements for obligations under section 163(f)(2)(A). It permits disclosure statements for digital assets to appear in marketing materials and other prescribed locations, and treats any digital asset without a fixed maturity date as maturing 25 years after issuance for purposes of the excise tax under section 4701. The amendments apply to taxable years ending after the date of introduction of this Act, except the maturity rule, which applies to assets issued after that date.

This section treats losses from worthless digital assets, other than tokenized digital assets economically equivalent to securities, as sustained on the last day of the taxable year. It includes such tokenized digital assets in the definition of security for purposes of the worthless security loss rules. It also extends the mark-to-market and related rules for securities futures contracts to futures contracts in digital assets by defining them as specified asset futures contracts. The changes apply to taxable years ending after the date of enactment.

This section treats traded digital assets (other than specified stablecoins) as marketable securities under section 731(c) for purposes of partnership distributions to partners. It treats specified stablecoins as money (at fair market value) for gain recognition on such distributions, with special basis rules applying to exempt U.S. dollar stablecoins. It includes traded digital assets in determining investment company status under section 351(e). It treats lending, rental, sale-and-repurchase, and other transfers of specified stablecoins as indebtedness. The amendments apply to distributions and transfers after December 31, 2026.

This section sources income from digital asset validation supporting activities in the United States if the taxpayer is a United States resident and outside the United States if the taxpayer is a nonresident. It applies the sourcing rule at the partner level for partnerships, attributes income to foreign branches of United States persons or United States branches of nonresidents, and treats all such income as ordinary income. The rules apply to taxable years beginning after the date of enactment.

This section permits an entity or arrangement to qualify as a trust for federal tax purposes even if the trustee stakes digital assets, retains or distributes staking rewards, selects assets for staking, or borrows to maintain liquidity for redemptions. The rule does not apply to entities actively conducting a trade or business of validating digital asset transactions and takes effect for taxable years ending after the date of enactment.

This section revises broker information reporting rules for digital assets under section 6045. It excludes from the definition of specified digital asset any qualified U.S. dollar stablecoin acquired at a basis of at least 99.5 percent of its redemption value. It exempts dispositions of digital assets used to pay de minimis fees from transaction-level reporting while requiring aggregate information. It also permits aggregate reporting for widely traded digital assets when a taxpayer elects simplified accounting under section 1051. The changes apply to returns required after December 31, 2027, with transition safe harbors available for 18 months after final regulations.

This section establishes the Digital Asset Voluntary Disclosure Program within 12 months of enactment. Eligible taxpayers may participate by filing amended returns for affected years within 24 months, paying all tax deficiencies plus interest and a 25 percent penalty (0 percent for certified taxpayers who attest under penalty of perjury that violations were not fraudulent or willful), and meeting other requirements set by the Secretary. In exchange, the Secretary may not assert further penalties under sections 6662 and 6663 or refer the taxpayer for criminal investigation under sections 7201, 7203, or 7206 for properly disclosed violations.

This section directs the Secretary of the Treasury to study the feasibility of using blockchain technologies, including zero-knowledge proofs and smart contracts, to reduce compliance costs, improve data security, and replace or supplement existing information reporting and withholding rules for digital asset transactions. The Secretary must submit a report with findings, legislative recommendations, resource needs, and an implementation timeline to the House Ways and Means Committee and the Senate Finance Committee by September 30, 2028.

This section establishes definitions for digital assets for purposes of the Internal Revenue Code. It defines a digital asset as any digital representation of value recorded on a cryptographically secured distributed ledger; a traded digital asset as a fungible digital asset with readily available exchange quotations that is not tokenized; a widely traded digital asset as a traded digital asset with consistent quotations, a market capitalization exceeding $500 million, and ownership by the taxpayer and related parties below 10 percent; a tokenized digital asset as one deriving more than an insignificant portion of its value from assets other than the ledger itself; and wrapped and reference digital assets as those redeemable on a one-for-one basis for another digital asset recorded on a different ledger.

This section expresses the sense of Congress that the Secretary of the Treasury should consider issuing regulations or guidance to simplify basis calculations for digital assets, specify fair market value methods for illiquid digital assets, apply sections 954 and subpart J foreign currency rules to digital assets, define active conduct of a trade or business for validating digital asset transactions including staking and mining, clarify treatment of digital assets that are also securities or commodities, address tokenized assets, and identify when tokenization, wrapping, forks, airdrops, and liquidity or staking pool token exchanges constitute realization events.

This section provides that nothing in the Act creates an inference that a digital asset does or does not constitute a security, commodity, debt, equity, stock, partnership interest, or trust interest under any provision of law, except where the Act expressly addresses such application. It further specifies that the Act creates no inference regarding the proper application of the Internal Revenue Code to any period before the period to which the Act applies.

This section reinstates the limitation that losses from wagering transactions are allowed only to the extent of gains from such transactions. It applies the limit to any otherwise allowable deduction incurred in carrying on a wagering transaction, effective for taxable years beginning after December 31, 2025.