,i  #aafth ,,congress  #ast ,session    
,h4 ,r4 #badd  ,,in ,,the ,,house ,,of  
,,representatives  ,april #i1 #bjai,mr4 
,davidson of ,ohio 7for himself1 ,mr4   
,soto1 ,mr4 ,gottheimer1 ,mr4 ,budd1    
,ms4 ,gabbard1 and ,mr4 ,perry7         
introduced the following bill2 which was
 referred to the ,committee on          
,financial ,services1 and in addition to
 the ,committee on ,ways and ,means1 for
 a period to be subsequently determined 
by the ,speaker1 in each case for       
consideration of such provisions as fall
 within the jurisdiction of the         
committee concerned  ,a ,,bill  ,to     
amend the ,securities ,act of #aicc and 
the ,securities ,exchange ,act of #aicd 
to exclude digital tokens from the      
definition of a security1 to direct the 
,securities and ,exchange ,commission to
 enact certain regulatory changes       
regarding digital units secured through 
public key cryptography1 to adjust      
taxation of virtual currencies held in  
individual retirement accounts1 to      

create a tax exemption for exchanges of 
one virtual currency for another1 to    
create a de minimis exemption from      
taxation for gains realized from the    
sale or exchange of virtual currency for
 other than cash1 and for other         
purposes4  #a4 ,short title ,this ,act  
may be cited as the ,token ,taxonomy    
,act of #bjai4  #b4 ,securities ,act of 
#aicc  7a7 ,definition of digital token 
,section #b7;a7 of the ,securities ,act 
of #aicc 7#ae ,u4,s4,c4 #gg;b7a77 is    
amended by adding at the end the        
following3  7#bj7 ,digital token ,the   
term digital token means a digital      
unit-- 7,a7 that is created--  7i7 in   
response to the verification or         
collection of proposed transactions2    
7ii7 pursuant to rules for the digital  
unit's creation and supply that cannot  
be altered by any single person or      
persons under common control2 or  7iii7 
as an initial allocation of digital     
units that will otherwise be created in 
accordance with clause 7i7 or 7ii72     

7,b7 that has a transaction history     
that-- 7i7 is recorded in a distributed1
 digital ledger or digital data         
structure in which consensus is achieved
 through a mathematically verifiable    
process2 and  7ii7 after consensus is   
reached1 resists modification or        
tampering by any single person or group 
of persons under common control2  7,c7  
that is capable of being transferred    
between persons without an intermediate 
custodian2 and  7,d7 that is not a      
representation of a financial interest  
in a company or partnership1 including  
an ownership interest or revenue share4 
7#ba7 ,digital unit ,the term digital   
unit means a representation of economic1
 proprietary1 or access rights that is  
stored in a computer-readable format4  4
  7b7 ,definition of security ,section  
#b7;a77#a7 of the ,securities ,act of   
#aicc 7#ae ,u4,s4,c4 #gg;b7a77#a77 is   
amended-- 7#a7 by inserting 7,a7 after  
7#a72 and  7#b7 by adding at the end the
 following3  7,b7 ,such term does not   

include a digital token4  4  7c7        
,exemption ,section #d7;a7 of the       
,securities ,act of #aicc 7#ae ,u4,s4,c4
 #gg;d7a77 is amended by adding at the  
end the following3  7#h7 ,transactions  
involving the offer1 promotion1 or sale 
of a digital unit if-- 7,a7 the person  
offering1 promoting1 or selling the     
digital unit has a reasonable and good  
faith belief that such digital unit is a
 digital token2 and  7,b7 within ninety 
days following a written notification   
from the ,commission to such person that
 such digital unit has been determined  
by the ,commission to be a security1    
posts public notice of such notification
 and takes reasonable efforts to cease  
all sales and return all proceeds from  
any sales of such digital unit1         
excluding funds reasonably spent on the 
development of technology associated    
with the digital unit4  4  7d7          
,preemption of ,state law ,section #ah  
of the ,securities ,act of #aicc 7#ae   
,u4,s4,c4 #ggr7 is amended-- 7#a7 by    

redesignating subsection 7d7 as         
subsection 7e72 and  7#b7 by inserting  
after subsection 7c7 the following3  7d7
 ,digital tokens  7#a7 ,in general ,no  
law1 rule1 regulation1 or order1 or     
other administrative action of any      
,state or any political subdivision     
thereof--  7,a7 requiring1 or with      
respect to1 registration or             
qualification of securities1 or         
registration or qualification of        
securities transactions1 shall directly 
or indirectly apply to a digital token2 
7,b7 shall directly or indirectly       
prohibit1 limit1 or impose any          
conditions upon the use of-- 7i7 with   
respect to a digital token1 any         
disclosure document concerning an offer 
or sale of a digital token that is      
prepared by or on behalf of a person    
developing1 offering1 or selling a      
digital token2 or  7ii7 any proxy       
statement1 report to digital            
token-holders1 or other disclosure      
document relating to a digital token or 

a person developing1 offering1 or       
selling a digital token2  7,c7 shall    
directly or indirectly prohibit1 limit1 
or impose conditions1 based on the      
merits of a digital token offering or a 
person developing1 offering1 or selling 
a digital token1 upon the offer or sale 
of any digital token2 or  7,d7 shall    
directly or indirectly require the      
filing of any notices or other          
documents1 or the assessment of any     
fees1 with respect to digital tokens or 
digital token transactions4  7#b7       
,preservation of fraud authority ,states
 and political subdivisions thereof     
shall retain jurisdiction under the laws
 of such ,state to investigate and bring
 enforcement actions with respect to    
fraud or deceit1 or unlawful conduct by 
any person1 in connection with digital  
tokens or digital token transactions4  4
  #c4 ,securities ,exchange ,act of     
#aicd  7a7 ,definition of bank ,section 
#c7;a77#f77;,c7 of the ,securities      
,exchange ,act of #aicd 7#ae ,u4,s4,c4  

#gh;c7a77#f77;,c77 is amended-- 7#a7 by 
inserting or trust company1 after ,home 
,owners' ,loan ,act12 and  7#b7 by      
striking receiving deposits or          
exercising fiduciary powers and         
inserting receiving deposits1 providing 
custodial services1 or exercising       
fiduciary powers4  7b7 ,definition of   
security ,section #c7;a77#aj7 of the    
,securities ,exchange ,act of #aicd 7#ae
 ,u4,s4,c4 #gh;c7a77#aj77 is amended--  
7#a7 by inserting 7,a7 after 7#a72 and  
7#b7 by adding at the end the following3
  7,b7 ,such term does not include a    
digital token4  4  7c7 ,definition of   
digital token ,section #c7;a7 of the    
,securities ,exchange ,act of #aicd 7#ae
 ,u4,s4,c4 #gh;c7a77 is amended by      
adding at the end the following3  7#hb7 
,digital token ,the term digital token  
has the meaning given to it in section  
#b7;a7 of the ,securities ,act of #aicc4
  4  7d7 ,clerical amendments ,section  
#c7;a7 of the ,securities ,exchange ,act
 of #aicd 7#ae ,u4,s4,c4 #gh;c7a77 is   

amended--  7#a7 by moving paragraph     
7#gi7 so as to appear after paragraph   
7#gh72 and  7#b7 by redesignating the   
second paragraph 7#hj7 7relating to     
,funding portal7 as paragraph 7#ha74    
#d4 ,investment ,advisers ,act of #aidj 
7a7 ,definition of digital token        
,section #bjb7;a7 of the ,investment    
,advisers ,act of #aidj 7#ae ,u4,s4,c4  
#hj;b-#b7;a77 is amended-- 7#a7 by      
redesignating the second paragraph 7#bi7
 as paragraph 7#ca72 and  7#b7 by adding
 at the end the following3  7#cb7 ,the  
term digital token has the meaning given
 to it in section #b7;a7 of the         
,securities ,act of #aicc4  4  7b7      
,definition of security ,section        
#bjb7;a77#ah7 of the ,investment        
,advisers ,act of #aidj 7#ae ,u4,s4,c4  
#hj;b-#b7;a77#ah77 is amended-- 7#a7 by 
inserting 7,a7 after 7#ah72 and  7#b7 by
 adding at the end the following3  7,b7 
,such term does not include a digital   
token4  4  7c7 ,definition of bank      
,section #bjb7;a77#b77;,c7 of the       

,investment ,advisers ,act of #aidj 7#ae
 ,u4,s4,c4 #hj;b-#b7;a77#b77;,c77 is    
amended by striking receiving deposits  
or exercising fiduciary powers and      
inserting receiving deposits1 providing 
custodial services1 or exercising       
fiduciary powers4  #e4 ,investment      
,company ,act of #aidj  7a7 ,definition 
of digital token ,section #bjb7;a7 of   
the ,investment ,company ,act of #aidj  
7#ae ,u4,s4,c4 #hj;a-#b7;a77 is amended 
by adding at the end the following3     
7#ee7 ,the term digital token has the   
meaning given to it in section #b7;a7 of
 the ,securities ,act of #aicc4  4  7b7 
,definition of security ,section        
#bjb7;a77#cf7 of the ,investment        
,company ,act of #aidj 7#ae ,u4,s4,c4   
#hj;a-#b7;a77#cf77 is amended--  7#a7 by
 inserting 7,a7 after 7#cf72 and  7#b7  
by adding at the end the following3     
7,b7 ,such term does not include a      
digital token4  4  7c7 ,definition of   
bank ,section #b7;a77#e7 of the         
,investment ,company ,act of #aidj 7#ae 

,u4,s4,c4 #hj;a-#b7;a77#e77 is amended  
by striking receiving deposits or       
exercising fiduciary powers and         
inserting receiving deposits1 providing 
custodial services1 or exercising       
fiduciary powers4  #f4 ,rule of         
,construction with respect to ,,cftc and
 ,,ftc ,nothing in this ,act or the     
amendments made by this ,act shall be   
construed to limit the application of   
the ,commodity ,exchange ,act or the    
,federal ,trade ,commission ,act4  #g4  
,satisfactory control location          
requirement  ,not later than #ij days   
after the date of the enactment of this 
,act1 the ,commission shall amend       
section #bdj4ae;c#c-c of title #ag1     
,code of ,federal ,regulations1 to      
provide that the requirement for a      
satisfactory control location for any   
digital unit 7as defined under section  
#b7;a7 of the ,securities ,act of #aicc7
 that is a security is fulfilled by     
protecting the digital unit using public
 key cryptography and by following      

commercially reasonable cybersecurity   
practices to maintain the privacy and   
accessibility of sufficient private key 
material to solely be able to sign on   
behalf of such digital unit4  #h4       
,individual retirement account          
investments in certain virtual          
currencies not treated as distributions 
7a7 ,in general ,section #djh7m7 of the 
,internal ,revenue ,code of #aihf is    
amended-- 7#a7 in paragraph 7#c7--  7,a7
 in the heading of the paragraph1 by    
striking and bullion and inserting 1    
bullion1 and virtual currencies2  7,b7  
in subparagraph 7,a77iv71 by striking   
or2  7,c7 in subparagraph 7,b71 by      
inserting or after futures contract12   
7,d7 by inserting after subparagraph    
7,b7 the following3  7,c7 virtual       
currency4  2 and  7,e7 by striking if   
such bullion and inserting ,this        
paragraph shall only apply to bullion   
which2 and  7#b7 by adding at the end   
the following3  7#d7 ,virtual currency  
defined ,for purposes of this           

subsection1 the term virtual currency   
means a digital representation of value 
that is used as a medium of exchange and
 is not currency 7within the meaning of 
section #ihh74  4  7b7 ,effective date  
,the amendments made by this section    
shall apply to sales or exchanges on or 
after ,january #a1 #bjag4  #i4 ,certain 
exchanges of virtual currency treated as
 non-taxable exchanges  7a7 ,in general 
,section #ajca of the ,internal ,revenue
 ,code of #aihf is amended--  7#a7 in   
the heading1 by striking real property  
and inserting certain property2 and     
7#b7 in subsection 7a71 by adding at the
 end the follow new paragraph3  7#d7    
,exchange of virtual currency ,an       
exchange of virtual currency 7as defined
 under section #djh7m77 shall be treated
 as if such exchange were an exchange of
 real property under this section4  4   
7b7 ,clerical amendment ,the table of   
parts for part ,,iii of subchapter ,o of
 chapter #a of such ,code is amended by 
striking ,exchange of real property and 

inserting ,exchange of certain property 
4  7c7 ,effective date ,the amendments  
made by this section shall apply to     
exchanges made on or after ,january #a1 
#bjag4  #aj4 ,gain from sale or exchange
 of virtual currency  7a7 ,in general   
,part ,,iii of subchapter ,b of chapter 
#a of the ,internal ,revenue ,code of   
#aihf is amended by inserting after     
section #aci;,f the following new       
section3  #aci;,g4 ,gain from sale or   
exchange of virtual currency  7a7 ,in   
general ,gross income shall not include 
gain from the sale or exchange of       
virtual currency 7as defined under      
section #djh7m77 for other than cash or 
cash equivalents4  7b7 ,limitation  7#a7
 ,in general ,the amount of gain        
excluded from gross income under        
subsection 7a7 with respect to a sale or
 exchange of virtual currency shall not 
exceed #fjj4  7#b7 ,aggregation rule    
,for purposes of this subsection1 all   
sales or exchanges which are part of the
 same transaction 7or a series of       

related transactions7 shall be treated  
as one sale or exchange4  7c7 ,inflation
 adjustment ,in the case of any taxable 
year beginning in a calendar year after 
#bjah1 the dollar amount in subsection  
7b7 shall be increased by an amount     
equal to--  7#a7 such dollar amount1    
multiplied by  7#b7 the cost-of-living  
adjustment determined under section     
#a7;f77#c7 for the calendar year in     
which the taxable year begins1          
determined by substituting calendar year
 #bjag for calendar year #bjaf in       
subparagraph 7a77ii7 thereof4  ,any     
increase determined under the preceding 
sentence shall be rounded to the nearest
 multiple of #ej4  4  7b7 ,clerical     
amendment ,the table of sections for    
part ,,iii of subchapter ,b of chapter  
#a of such ,code is amended by inserting
 after the item relating to section     
#aci;,f the following new item3  ,sec4  
#aci;,g4 ,gain from sale or exchange of 
virtual currency4  4  7c7 ,reporting of 
gains or losses ,the ,secretary of the  

,treasury shall issue regulations       
providing for information returns on    
transactions in virtual currency 7as    
defined under section #djh7m7 of the    
,internal ,revenue ,code of #aihf7 for  
which gain or loss is recognized4  7d7  
,effective date ,the amendments made by 
this section shall apply with respect to
 transactions entered into on or after  
,january #a1 #bjag4