To amend the Internal Revenue Code of 1986 to reform the treatment of digital assets.
Analysis under review: This bill has generated analysis that may be too generic or incomplete. Clause-level evidence remains available below.
Summary
What This Bill Does
This bill comprehensively reforms the Internal Revenue Code to create a clear tax framework for digital assets (cryptocurrencies and tokens). It defines "digital asset" and "actively traded digital asset" for federal tax purposes, creates a de minimis exclusion for small crypto purchases of goods and services (under $300), extends wash sale rules to cover crypto trading, allows tax-deferred treatment for crypto lending, enables mark-to-market elections for crypto dealers and traders, defers income recognition for mining and staking until disposition, and allows favorable charitable contribution treatment for appreciated digital assets. All provisions sunset after December 31, 2035.
Who Benefits and How
- Cryptocurrency holders and retail users benefit from the de minimis exclusion (Section 2) that exempts gains under $300 on everyday crypto purchases, removing a major friction point for using crypto as a payment method
- Crypto miners and stakers benefit from income deferral (Section 6) that delays tax recognition until they actually sell mined/staked tokens, improving cash flow and reducing tax complexity
- Crypto lending platforms and DeFi protocols benefit from the lending agreement provisions (Section 3) that treat crypto lending like securities lending, providing legal certainty for lending transactions
- Crypto exchanges, dealers, and market makers benefit from the mark-to-market election (Section 5) that lets them use familiar securities accounting methods for digital asset inventories
- Charitable organizations benefit from expanded donation rules (Section 7) that let donors contribute appreciated crypto at fair market value without capital gains tax, encouraging larger crypto donations
- Crypto donors benefit from the same charitable contribution rules, receiving full fair market value deductions for appreciated digital asset donations
Who Bears the Burden and How
- Crypto traders face new wash sale restrictions (Section 4) that close the existing loophole allowing tax-loss harvesting with immediate repurchase of the same crypto -- a strategy currently legal for crypto but not stocks
- IRS and Treasury bear the regulatory burden of writing extensive new regulations across all seven sections, defining terms, and establishing compliance frameworks for an entirely new asset class
- Crypto users generally face new recordkeeping requirements (Sections 2, 4) including maintaining separate wallets or accounts to distinguish between eligible and ineligible transactions
- Tax preparation industry must adapt to complex new digital asset rules across multiple IRC sections
Key Provisions
- Section 1: Defines "digital asset" and "actively traded digital asset" in IRC Section 7701, establishing the foundational legal taxonomy
- Section 2: Creates new IRC Section 139J with a $300 de minimis exclusion for crypto purchases of goods/services, with a $5,000 annual cap and inflation adjustment
- Section 3: Extends IRC Section 1058 securities lending rules to cover digital asset lending, preventing taxable events on loan/return
- Section 4: Rewrites IRC Section 1091 to extend wash sale rules to digital assets (with a stablecoin exception), closing the crypto tax-loss harvesting loophole
- Section 5: Adds IRC Section 475(g) allowing digital asset dealers and traders to elect mark-to-market accounting
- Section 6: Adds IRC Section 451(l) deferring income recognition for mining/staking until sale or disposition; adds IRC Section 863(f) sourcing mining income by recipient residence
- Section 7: Amends IRC Section 170 to treat qualified appreciated digital assets like publicly traded stock for charitable contribution deduction purposes
- All provisions terminate for taxable years beginning after December 31, 2035
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers.
At a Glance
What This Bill Does
Comprehensively reforms the Internal Revenue Code to establish a clear tax framework for digital assets, including definitions, de minimis exclusions for small transactions, wash sale rule extensions, lending agreement treatment, mark-to-market elections, mining/staking income deferral, and charitable contribution rules, all sunsetting after 2035.
Key Policy Areas
Taxation, Digital Assets & Cryptocurrency, Financial Regulation
Primary Purpose
Comprehensively reforms the Internal Revenue Code to establish a clear tax framework for digital assets, including definitions, de minimis exclusions for small transactions, wash sale rule extensions, lending agreement treatment, mark-to-market elections, mining/staking income deferral, and charitable contribution rules, all sunsetting after 2035.
Policy Domains
Digital Asset Tax Reform
Identified Gains
Contextual inference, no direct clause citation- Cryptocurrency exchanges and trading platforms
- Crypto holders and retail users
- Crypto miners and stakers
- DeFi lending platforms
- Charitable organizations accepting crypto donations
- Tax advisory and compliance firms specializing in digital assets
Contextual inference, no direct clause citation
Identified Costs
Contextual inference, no direct clause citation- Crypto traders who used the wash sale loophole
- IRS and Treasury (extensive rulemaking burden)
- Crypto users (new recordkeeping requirements)
Contextual inference, no direct clause citation
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