To amend the Internal Revenue Code of 1986 to reform the treatment of digital assets.
Summary
What This Bill Does
The bill adds new paragraph (51) to IRC Section 7701 defining 'digital asset' as any digital representation of value recorded on a cryptographically secured distributed ledger, creates new IRC Section 139J excluding from gross income any gain or loss on sales/exchanges/dispositions of digital assets used to purchase goods or services in personal transactions, provided the transaction value, and requires this is the enacted text of new IRC Section 139J as inserted by Section 2. It relies on exemptions, definition changes, reporting requirements, and compliance mandates. The main policy areas are Finance, Taxation, Technology, and Trade.
Who Benefits and How
Retail cryptocurrency users making everyday purchases could see lower costs, Retail cryptocurrency users could see lower costs, and Crypto stakers (Ethereum, proof-of-stake validators) could see lower costs.
Who Bears the Burden and How
Crypto traders who use tax-loss harvesting with immediate repurchase could face higher costs, Crypto traders could face higher costs, and IRS / Treasury would take on compliance duties.
Key Provisions
- Adds new paragraph (51) to IRC Section 7701 defining 'digital asset' as any digital representation of value recorded on a cryptographically secured distributed ledger.
- Creates new IRC Section 139J excluding from gross income any gain or loss on sales/exchanges/dispositions of digital assets used to purchase goods or services in personal transactions, provided the transaction value...
- Requires this is the enacted text of new IRC Section 139J as inserted by Section 2.
- Amends IRC Section 1058 to extend securities lending tax treatment to digital assets.
- Requires completely rewrites IRC Section 1091 (wash sales) to extend coverage from securities to 'specified assets' including digital assets.
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers with clause-level evidence links.
At a Glance
What This Bill Does
The bill adds new paragraph (51) to IRC Section 7701 defining 'digital asset' as any digital representation of value recorded on a cryptographically secured distributed ledger, creates new IRC Section 139J excluding from gross income any gain or loss on sales/exchanges/dispositions of digital assets used to purchase goods or services in personal transactions, provided the transaction value, and requires this is the enacted text of new IRC Section 139J as inserted by Section 2.
Key Policy Areas
Finance, Taxation, Technology, Trade
Primary Purpose
The bill adds new paragraph (51) to IRC Section 7701 defining 'digital asset' as any digital representation of value recorded on a cryptographically secured distributed ledger, creates new IRC Section 139J excluding from gross income any gain or loss on sales/exchanges/dispositions of digital assets used to purchase goods or services in personal transactions, provided the transaction value, and requires this is the enacted text of new IRC Section 139J as inserted by Section 2.
Policy Domains
Digital Asset Tax Reform
Identified Gains
- Retail cryptocurrency users making everyday purchases
- Retail cryptocurrency users
- Crypto stakers (Ethereum, proof-of-stake validators)
- Crypto miners (Bitcoin, proof-of-work)
- Federal government (increased tax revenue from closed loophole)
Identified Costs
- Crypto traders who use tax-loss harvesting with immediate repurchase
- Crypto traders
- IRS / Treasury
- Crypto exchanges and brokers (new basis reporting requirements)
- IRS / Treasury (rulemaking for forks, airdrops, fees)
Legislative Progress
IntroducedMs. Lummis introduced the following bill; which was read twice …
Stakeholder Effects
cui bono?How this legislation distributes effects. Mention counts reflect frequency, not effect magnitude.
Crypto exchanges and brokers (new basis reporting requirements), Crypto exchanges and market makers, Crypto holders making charitable donations
Positive-direction: Crypto exchanges and market makers, Crypto holders making charitable donations, Crypto holders who lend tokens for yield, Crypto lending platforms (e.g., Aave, Compound, centralized lenders), Crypto miners (Bitcoin, proof-of-work), Crypto stakers (Ethereum, proof-of-stake validators), Cryptocurrency industry (exchanges, custodians, issuers), Mining facility operators and hosting providers, Professional crypto traders, Retail cryptocurrency users, Retail cryptocurrency users making everyday purchases, Stablecoin issuers, Stablecoin issuers and users (exempted from wash sale rules), Stablecoin users (exempted)
Negative-direction: Crypto exchanges and brokers (new basis reporting requirements), Crypto traders, Crypto traders who use tax-loss harvesting with immediate repurchase
Federal government (deferred tax revenue), Federal government (increased tax revenue from closed loophole), Federal government (reduced capital gains tax revenue)
Positive-direction: Federal government (increased tax revenue from closed loophole)
Negative-direction: Federal government (deferred tax revenue), Federal government (reduced capital gains tax revenue), IRS / Treasury, IRS / Treasury (rulemaking for forks, airdrops, fees)
Dealers in specified assets (exempt from wash sale rules in ordinary course), Donor-advised funds and crypto-focused philanthropy platforms, Traditional financial firms expanding into crypto dealing
Crypto payment processors, Crypto payment processors (e.g., BitPay, Strike)
Crypto tax software providers (increased compliance complexity)
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
- "the_secretary"
- → Secretary of the Treasury
Key Definitions
Terms defined in this bill
Any digital representation of value recorded on a cryptographically secured distributed ledger or similar technology, excluding representations of financial assets (which are treated as the underlying asset) and excluding payment stablecoins from certain rules.
A fungible digital asset for which quotations are readily available on a digital asset exchange.
For wash sale purposes: any security (per IRC 475(c)(2)) including contracts/options, plus any digital asset, notional principal contract, or derivative instrument in a digital asset.
A digital asset designed as a means of payment/settlement whose issuer is obligated to convert/redeem for a fixed amount of monetary value and maintains stable value. Excluded from wash sale rules. Does not include national currencies, FDIC deposits, or securities.
A taxpayer who regularly purchases/sells specified assets from/to customers, or regularly enters into/terminates positions in specified assets with customers, in the ordinary course of a trade or business.
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
Learn more about our methodology