Applying Existing Tax Anti-Abuse Rules to Digital Assets Act

of Specified Assets and Specified Asset Futures Contracts To Sell.--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-- ``(1) substantially identical specified assets were sold, or ``(2) another short sale of (or specified asset futures contracts to sell) substantially identical specified assets was entered into. For purposes of this subsection, the term ``specified asset futures contract'' has the meaning provided by section 1234B(c).''. (3) The heading of section 1091 is amended by striking ``stock or securities'' and inserting ``specified assets''. (4) 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''. (5) 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''. (6) Section 312(f)(1) is amended by striking ``stock or securities'' and inserting ``specified assets''. (7) Section 1256(f)(5) is amended by striking ``stock or securities'' and inserting ``specified assets''. (8) Section 6045(g)(2)(B)(ii) is amended-- (A) by striking ``stock or securities'' and inserting ``specified assets'', and (B) by striking ``identical securities'' and inserting ``identical specified assets''. (e) Effective Date.--The amendments made by this section shall apply to dispositions after the date of the introduction of this Act. (f) Transition Rule Relating to Broker Reporting.--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. SEC. 3. APPLICATION OF CONSTRUCTIVE SALE RULES TO DIGITAL ASSETS. (a) In General.--Section 1259(b)(1) is amended by inserting ``, digital asset (other than a qualified U.S. dollar stablecoin)'' after ``debt instrument''. (b) Application of Exception for Sales of Nonpublicly Traded Property.--Section 1259(c)(2) is amended by inserting ``or widely traded digital asset'' after ``marketable security (as defined in section 453(f))''. (c) Treatment of Tokenized Digital Assets as Substantially Identical to Economically Equivalent Financial Property.--Section 1259(c) is amended by adding at the end the following new paragraph: ``(5) Treatment of tokenized digital assets as substantially identical to economically equivalent financial property.--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.''. (d) Functional Currency Other Than the Dollar.--Section 1259(e) is amended by adding at the end the following new paragraph: ``(4) Qualified u.s. dollar stablecoins and functional currency other than the dollar.--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.''. (e) Effective Date.--The amendments made by this section shall apply to constructive sales after the date of the introduction of this Act. SEC. 4. 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 (4)(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) Digital asset validation supporting activities.--The term `digital asset validation supporting activities' means staking, mining, or similar activities in support of the validation of digital asset transactions. ``(10) 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. ``(11) Staking.--The term `staking', when used in connection with a digital asset, means-- ``(A) making such asset available in support of the validation of digital asset transactions, and ``(B) except as otherwise provided by the Secretary, any substantially similar activity. ``(12) Mining.--The term `mining', when used in connection with a digital asset, means-- ``(A) performing computations, or making available computing power, in support of the validation of digital asset transactions, and ``(B) except as otherwise provided by the Secretary, any substantially similar activity.''. SEC. 5. RULES OF CONSTRUCTION. (a) No Inference With Respect to Application of Other Provisions of Law.--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. (b) No Inference With Respect to Prior Periods.--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. <all>