,,ii  #aaith ,,congress  #b;d ,session  
,s4 #efaf  ,,in ,,the ,,senate ,,of     
,,the ,,united ,,states  ,september #cj1
 #bjbf,mr4 ,daines 7for himself1 ,ms4   
,lummis1 ,mr4 ,moreno1 and ,mr4 ,scott  
of ,south ,carolina7 introduced the     
following bill2 which was read twice and
 referred to the ,committee on ,finance 
,a ,,bill  ,to amend the ,internal      
,revenue ,code of #aihf to reform the   
treatment of digital assets4  #a4 ,short
 title2 etc  7a7 ,short title ,this ,act
 may be cited as the ,aligning ,digital 
,assets with ,principles of ,taxation   
,act or the ,,adapt ,act4  7b7 ,table of
 contents ,the table of contents of this
 ,act is as follows3 ,sec4 #a4 ,short   
title2 etc4,sec4 #b4 ,nonrecognition of 
gain or loss on certain sales1          
exchanges1 or dispositions of           
stablecoins4,sec4 #c4 ,mark to market   
election4,sec4 #d4 ,source rules for    
digital asset validation                
activities4,sec4 #e4 ,certain trading in
 digital assets not treated as a trade  

or business within the ,united          
,states4,sec4 #f4 ,transfer of digital  
assets under certain agreements4,sec4   
#g4 ,application of wash sale rules to  
digital assets4,sec4 #h4 ,treatment of  
trusts and publicly traded partnerships 
holding digital assets4,sec4 #i4        
,application of constructive sale rules 
to digital assets4,sec4 #aj4 ,charitable
 contributions of widely traded digital 
assets4,sec4 #aa4 ,treatment of de      
minimis digital asset network fees4,sec4
 #ab4 ,treatment of income from         
qualified digital asset validation      
activity by tax-exempt entities4,sec4   
#ac4 ,application of                    
registration-required obligation        
rules4,sec4 #ad4 ,treatment of certain  
foreign entities established in         
connection with decentralized autonomous
 organizations4,sec4 #ae4 ,definitions4 
#b4 ,nonrecognition of gain or loss on  
certain sales1 exchanges1 or            
dispositions of stablecoins  7a7 ,in    
general ,part ,,iii of subchapter ,o of 

chapter #a of the ,internal ,revenue    
,code of #aihf is amended by inserting  
after section #ajcc the following new   
section3  #ajcd4 ,certain sales1        
exchanges1 or dispositions of           
stablecoins  7a7 ,in general ,no gain or
 loss shall be recognized on the sale1  
exchange1 or disposition of covered     
payment stablecoins to purchase products
 or services4  7b7 ,definitions  7#a7   
,covered payment stablecoin ,the term   
covered payment stablecoin means a      
qualified ,u4,s4 dollar stablecoin      
which-- 7,a7 was identified in the most 
recent report published by the          
,secretary under paragraph 7#b7 before  
the sale1 exchange1 or disposition of   
such stablecoin1 and  7,b7 was acquired 
by the taxpayer at a price within #c    
percent of #a4jj4  7#b7 ,identification 
by ,treasury ,not less frequently than  
every #c months1 the ,secretary shall   
make publicly available a report        
identifying each qualified ,u4,s4 dollar
 stablecoin that1 during the #ab-month  

period ending on the last day of the    
preceding month1 was actively traded at 
a price within #c percent of #a4jj4  7c7
 ,exclusions  7#a7 ,trade or business   
,subsection 7a7 shall not apply to the  
sale1 exchange1 or disposition of a     
covered payment stablecoin by-- 7,a7 a  
trader1 broker1 or dealer in qualified  
,u4,s4 dollar stablecoins1 or  7,b7 to  
the extent provided by the ,secretary1  
any person in a trade or business which 
is substantially similar to a trade or  
business described in subparagraph 7,a74
  7#b7 ,functional currency other than  
,u4,s4 dollar ,subsection 7a7 shall not 
apply to any taxpayer or qualified      
business unit 7as defined in section    
#ihi7;a77 that uses a functional        
currency 7as defined in section         
#ihe7;b77 other than the dollar4  7d7   
,books and records ,in such form and    
manner as the ,secretary may prescribe1 
a taxpayer shall maintain books and     
records sufficient to distinguish sales1
 exchanges1 or dispositions of covered  

payment stablecoins eligible for        
nonrecognition under subsection 7a7 from
 transactions which are not eligible    
under such subsection4  7e7 ,regulations
 and guidance ,the ,secretary shall     
prescribe such regulations or other     
guidance as may be necessary or         
appropriate to carry out the purposes of
 this section1 including-- 7#a7         
requirements relating to recordkeeping  
and broker information reporting1 and   
7#b7 allocation of basis and            
characterization of the asset and any   
gain or loss4  4  7b7 ,exemption from   
information reporting ,section #fjde of 
such ,code is amended by adding at the  
end the following new subsection3  7i7  
,exemption for certain digital asset    
transactions  7#a7 ,covered payment     
stablecoins ,in the case of the sale1   
exchange1 or disposition of any covered 
payment stablecoin for which no gain or 
loss is recognized under section        
#ajcd7;a71 no return shall be required  
under subsection 7a74  7#b7 ,regulations

 ,the ,secretary shall prescribe such   
regulations or other guidance as may be 
necessary or appropriate to carry out   
this subsection1 including rules under  
which a broker-- 7,a7 may rely on       
information or certifications provided  
by a customer for purposes of           
determining whether any applicable      
requirements under section #ajcd have   
been satisfied1  7,b7 shall not be      
required to determine whether the       
requirement under section               
#ajcd7;b77#a77;,b7 has been satisfied   
with respect to a qualified ,u4,s4      
dollar stablecoin if the acquisition of 
such qualified ,u4,s4 dollar stablecoin 
was not effected by such broker1 and    
7,c7 shall not be required to determine 
any fact that is not known or reasonably
 available to such broker4  4  7c7      
,clerical amendment ,the table of       
sections for part ,,iii of subchapter ,o
 of chapter #a of the ,internal ,revenue
 ,code of #aihf is amended by inserting 
after the item relating to section #ajcc

 the following new item3 ,sec4 #ajcd4   
,certain sales1 exchanges1 or           
dispositions of stablecoins44  7d7      
,effective date ,the amendments made by 
this section shall apply with respect to
 transactions entered into after        
,december #ca1 #bjbf4  #c4 ,mark to     
market election  7a7 ,in general        
,section #dge of the ,internal ,revenue 
,code of #aihf is amended--  7#a7 in    
subsection 7d71 by adding at the end the
 following new paragraphs3  7#d7        
,treatment of covered digital assets    
which are securities or commodities  ,in
 the case of any covered digital asset  
which is a security or commodity        
7determined without regard to this      
paragraph71 such covered digital asset  
shall not be treated as a security or   
commodity for purposes of subsections   
7b7 through 7g74  7#e7  ,adjustments    
attributable to mark to market treatment
 of securities1 commodities1 or covered 
digital assets  ,in the case of an      
adjustment described in section #dha7;a7

 by reason of the application of        
subsection 7a71 7e71 7f71 or 7g7 of this
 section1 the character of any income or
 loss with respect to any property as a 
result of such adjustment shall be the  
same as the character of the gain or    
loss which would have resulted from the 
sale of such property as of the close of
 the taxable year preceding the year of 
the change 7within the meaning of       
section #dha7 under the method of       
accounting used for such preceding      
taxable year4  1  7#b7 by redesignating 
subsection 7g7 as subsection 7h71 and   
7#c7 by inserting after subsection 7f7  
the following new subsection3  7g7      
,election of mark to market for dealers 
and traders in covered digital assets   
7#a7  ,dealer in covered digital assets 
,in the case of a dealer in covered     
digital assets who elects the           
application of this paragraph1 this     
section shall apply to covered digital  
assets held by such dealer in the same  
manner as this section applies to       

securities held by a dealer in          
securities4  7#b7  ,trader in covered   
digital assets  ,in the case of a person
 who is engaged in a trade or business  
as a trader in covered digital assets   
and who elects to have this paragraph   
apply to such trade or business as a    
trader in such assets1 subsection       
7f77#a7 shall apply to covered digital  
assets held by such trader in connection
 with such trade or business in the same
 manner as such subsection applies to   
securities held by a trader in          
securities4  7#c7  ,election and        
revocation  ,an election under paragraph
 7#a7 or 7#b7 may be made without the   
consent of the ,secretary4 ,an election1
 once made1 shall apply to the taxable  
year for which made and all subsequent  
taxable years unless revoked with the   
consent of the ,secretary4  7#d7        
,definitions  ,for purposes of this     
subsection-- 7,a7 ,covered digital asset
 ,the term covered digital asset means--
  7i7 any traded digital asset1  7ii7   

any qualified ,u4,s4 dollar stablecoin1 
7iii7 any notional principal contract   
with respect to any traded digital      
asset1  7iv7 any evidence of an interest
 in1 or derivative financial instrument 
in1 any traded digital asset or any     
notional principal contract described in
 clause 7iii71 including any option1    
forward contract1 futures contract1     
short position1 or similar financial    
instrument1 and  7v7 any position       
which-- 7,i7 is not described in clause 
7i71 7ii71 7iii71 or 7iv71  7,,ii7 is a 
hedge with respect to any item described
 in clause 7i71 7ii71 7iii71 or 7iv71   
and  7,,iii7 is clearly identified in   
the taxpayer's records as being         
described in this clause before the     
close of the day on which it was        
acquired or entered into 7or such other 
time as the ,secretary may by           
regulations prescribe74  7,b7  ,dealer  
in covered digital assets  ,the term    
dealer in covered digital assets means a
 taxpayer which--  7i7 regularly        

purchases covered digital assets from1  
or sells covered digital assets to1     
customers in the ordinary course of a   
trade or business1 or  7ii7 regularly   
offers to enter into1 assume1 offset1   
assign1 or otherwise terminate positions
 in covered digital assets with         
customers in the ordinary course of a   
trade or business4  7#e7  ,regulations  
and guidance  ,the ,secretary shall     
prescribe such regulations or other     
guidance as may be necessary or         
appropriate to carry out the purposes of
 this subsection1 including rules to    
coordinate this subsection with the     
treatment under this section of a       
covered digital asset that is also a    
security or commodity4  4  7b7          
,application to first taxable year  ,in 
the case of any taxpayer who makes an   
election under paragraph 7#a7 or 7#b7 of
 subsection 7g7 of section #dge of the  
,internal ,revenue ,code of #aihf 7as   
added by subsection 7a77 with respect to
 the first taxable year beginning after 

the date of enactment of this ,act--    
7#a7 any identification required        
pursuant to the application of such     
subsection with respect to covered      
digital assets held on the first day of 
such taxable year shall be treated as   
timely made if made on or before the    
#cjth day of such taxable year1 and     
7#b7 the net amount of the adjustments  
required to be taken into account by the
 taxpayer under section #dha of such    
,code by reason of the application of   
such subsection shall be taken into     
account ratably over the #d-taxable year
 period beginning with such taxable     
year4  7c7  ,treatment as specified     
service trade or business  ,section     
#aii;,a7d77#b77;,b7 of the ,internal    
,revenue ,code of #aihf is amended by   
striking or commodities 7as defined in  
section #dge7;e77#b77 and inserting     
commodities 7as defined in section      
#dge7;e77#b771 traded digital assets1 or
 covered digital assets 7as defined in  
section #dge7;g77#d77;,a774  7d7        

,effective date  ,the amendments made by
 this section shall apply to taxable    
years beginning after ,december #ca1    
#bjbf4  #d4 ,source rules for digital   
asset validation activities  7a7 ,in    
general ,section #hfc of the ,internal  
,revenue ,code of #aihf is amended by   
adding at the end the following new     
subsection3  7f7 ,special rules for     
income from validation of digital assets
  7#a7 ,in general ,except as provided  
in paragraph 7#b7 or in regulations1 any
 income derived from digital asset      
validation supporting activities-- 7,a7 
if derived by a ,united ,states person1 
shall be sourced in the ,united ,states1
 and  7,b7 if derived by a person other 
than a ,united ,states person1 shall be 
sourced outside the ,united ,states4    
7#b7 ,treatment of branches  7,a7       
,foreign branches ,except as provided in
 regulations1 in the case of a ,united  
,states person with a qualified business
 unit 7as defined in section #ihi7;a77  
in a foreign country1 income described  

in paragraph 7#a7 that constitutes      
business profits attributable to such   
unit shall be sourced outside the       
,united ,states4  7,b7 ,u4,s4 branches  
,excepts as provided in regulations1 in 
the case of a person that is not a      
,united ,states person and that         
maintains an office or other fixed place
 of business in the ,united ,states1    
income described in paragraph 7#a7      
attributable to such office or other    
fixed place of business shall be sourced
 in the ,united ,states4  7,c7          
,attribution ,for purposes of           
subparagraphs 7,a7 and 7,b71 the        
,secretary shall issue such regulations 
or other guidance as the ,secretary     
determines necessary or appropriate for 
purposes of determining the amount of   
business profits attributable to a      
qualified business unit or office or    
other fixed place of business4  7#c7    
,special rules for mining  7,a7 ,certain
 amounts treated as income ,for purposes
 of paragraph 7#a7-- 7i7 ,in general    

,except as provided in clause 7ii71 any 
amounts received 7including amounts     
received as digital assets or           
transaction fees7 directly through a    
mining pool or similar arrangement as a 
result of the taxpayer's performance of1
 or contribution of computing power to1 
mining shall be treated as income       
derived from digital asset validation   
supporting activities4  7ii7 ,exclusion 
,compensation received for providing    
services to another person for services 
related to mining 7including hosting and
 equipment management services7 shall   
not be treated as income derived from   
digital asset validation supporting     
activities4  7,b7 ,rules for attribution
 to branches ,the ,secretary shall      
prescribe rules for the purposes of     
determining whether1 and to what extent1
 income derived from mining is          
attributable to a qualified business    
unit or an office or other fixed place  
of business under paragraph 7#b74 ,such 
rules shall take into account-- 7i7 the 

location and relative contribution of   
the computing equipment used in the     
mining activity1  7ii7 the location of  
personnel performing functions with     
respect to the operation1 management1 or
 maintenance of such equipment1 and     
7iii7 such other functions1 assets1     
risks1 or other factors as the          
,secretary determines necessary or      
appropriate4  7#d7 ,treatment of        
partnerships ,in the case of a          
partnership1 except as otherwise        
provided by the ,secretary in           
regulations or other guidance1 this     
subsection shall be applied at the      
partner level4  4  7b7 ,effective date  
,the amendment made by this section     
shall apply to income derived after the 
date of the enactment of this ,act4  7c7
 ,no inference ,the amendments made by  
this section shall not be construed to  
create any inference with respect to    
whether1 or the time at which1 a digital
 asset created1 issued1 acquired1 or    
received in connection with digital     

asset validation activity 7as defined in
 section #ggja7q71 as added by this     
,act7 is includible in gross income4    
#e4 ,certain trading in digital assets  
not treated as a trade or business      
within the ,united ,states  7a7 ,in     
general ,section #hfd7;b77#b7 of the    
,internal ,revenue ,code of #aihf is    
amended by redesignating subparagraph   
7,c7 as subparagraph 7,d7 and by        
inserting after subparagraph 7,b7 the   
following new subparagraph3  7,c7       
,digital assets  7i7 ,in general        
,trading in traded digital assets       
through a resident broker1 commission   
agent1 custodian1 or other independent  
agent4  7ii7 ,trading for taxpayer's own
 account ,trading in traded digital     
assets for the taxpayer's own account1  
whether by the taxpayer or the          
taxpayer's employees or through a       
resident broker1 commission agent1      
custodian1 staking provider1 or other   
agent1 and whether or not any such      
employee or agent has discretionary     

authority to make decisions in effecting
 the transactions4 ,this clause shall   
not apply in the case of a dealer in    
covered digital assets 7as defined in   
section #dge7;g77#d77;,b774  4  7b7     
,conforming amendments  7#a7            
,subparagraph 7,d7 of section           
#hfd7;b77#b7 of such ,code 7as          
redesignated by subsection 7a77 is      
amended-- 7,a7 by striking subparagraphs
 7,a77i7 and 7,b77i7 and inserting      
subparagraphs 7,a77i71 7,b77i71 and     
7,c77i71 and  7,b7 by striking or in    
commodities and inserting in            
commodities1 or in traded digital       
assets4  7#b7 ,the heading of section   
#hfd7;b77#b7 of such ,code is amended by
 striking or commodities and inserting 1
 commodities1 or digital assets4  7c7   
,effective date  7#a7 ,in general ,the  
amendments made by this section shall   
apply to taxable years beginning after  
,december #ca1 #bjbf4  7#b7 ,no         
inference ,the amendments made by this  
section shall not be construed to create

 any inference with respect to the      
application of section #hfd7;b77#b7 of  
the ,internal ,revenue ,code of #aihf to
 the trading of digital assets for any  
period beginning before the date        
described in paragraph 7#a74  #f4       
,transfer of digital assets under       
certain agreements  7a7 ,transfers under
 agreement  7#a7 ,in general ,section   
#ajeh of the ,internal ,revenue ,code of
 #aihf is amended-- 7,a7 in subsection  
7a71 by striking securities 7as defined 
in section #abcf7;c77 and inserting     
applicable assets1 and  7,b7 by adding  
at the end the following new subsection3
  7d7 ,applicable asset ,for purposes of
 this section1 the term applicable asset
 means-- 7#a7 any security 7as defined  
in section #abcf7;c771 and  7#b7 traded 
digital assets4  4  7#b7 ,conforming    
amendments  7,a7 ,subsections 7a7 and   
7b7 of section #ajeh of such ,code1 as  
amended by paragraph 7#a71 are each     
amended by striking securities each     
place it appears and inserting          

applicable assets4  7,b7 ,the heading of
 section #ajeh of such ,code is amended 
by striking securities and inserting    
assets4  7,c7 ,the item relating to     
section #ajeh in the table of sections  
for part ,,iv of subchapter ,o of       
chapter #a of such ,code is amended by  
striking securities and inserting       
assets4  7b7 ,treatment of certain legal
 entitlements and obligations which     
accrue during period of agreement       
,section #ajeh7;b77#b7 of the ,internal 
,revenue ,code of #aihf1 as amended by  
subsection 7a77#b71 is amended by       
inserting 7including1 in the case of a  
traded digital asset1 to the extent     
provided by the ,secretary1 amounts     
equivalent to any protocol distribution 
or staking reward with respect to such  
asset1 or to any transaction fee1       
priority fee1 or tip allocated to the   
owner by reason of staking7 after and   
other distributions4  7c7 ,payments with
 respect to loans  7#a7 ,in general     
,section #eab of the ,internal ,revenue 

,code of #aihf is amended-- 7,a7 in     
subsection 7a77#e77;,a71 by striking in 
respect of a security 7as defined in    
section #abcf7;c77 and inserting in     
respect of an applicable asset 7as      
defined in section #ajeh7;d771 and  7,b7
 in subsection 7b77#e71 by striking     
securities 7as defined in section       
#abcf7;c77 and inserting applicable     
assets 7as defined in section           
#ajeh7;d774  7#b7 ,inclusion of certain 
payments ,section #eab7;a77#e77;,a77i7  
of such ,code is amended by striking or 
other distributions and inserting       
property1 legal entitlements1 or other  
distributions4  7#c7 ,conforming        
amendments  7,a7 ,section #eab of such  
,code is amended by striking payments   
with respect to securities loans each   
place it appears in subsection 7a77#e7  
and 7b77#a7 and inserting payments with 
respect to applicable asset loans4  7,b7
 ,section #eab7;a77#e7 of such ,code is 
amended-- 7i7 by striking the security  
each place it appears and inserting the 

applicable asset1  7ii7 by striking     
securities each place it appears and    
inserting applicable assets1 and  7iii7 
by striking securities loans in the     
heading thereof and inserting applicable
 asset loans4  7,c7 ,the following      
provisions of the ,internal ,revenue    
,code of #aihf are each amended by      
striking payments with respect to       
securities loans 7as defined in section 
#eab7;a77#e77 and inserting payments    
with respect to applicable asset loans  
7as defined in section #eab7;a77#e773   
7i7 ,section #eji7;e74  7ii7 ,section   
#ead7;c77#h77;,a74  7iii7 ,section      
#hea7;b77#b77;,a74  7iv7 ,section       
#didj7;c77#b74  7,d7 ,section           
#bfc7;g77#b77;,b77iv7 of such ,code is  
amended by striking a payment with      
respect to a security loan 7as defined  
in section #eab7;a77#e77 and inserting a
 payment with respect to an applicable  
asset loan 7as defined in section       
#eab7;a77#e774  7d7 ,effective date     
7#a7 ,in general ,the amendments made by

 this section shall apply to transfers  
after the date of the enactment of this 
,act4  7#b7 ,no inference ,the          
amendments made by this section shall   
not be construed to create any inference
 with respect to the non-recognition    
treatment of the transfer of any traded 
digital asset 7within the meaning of    
section #ajeh7;d7 of the ,internal      
,revenue ,code of #aihf1 as added by    
this section7 pursuant to an agreement  
that would otherwise qualify under #ajeh
 of such ,code before the date described
 in paragraph 7#a74  #g4 ,application of
 wash sale rules to digital assets  7a7 
,in general ,section #ajia of the       
,internal ,revenue ,code of #aihf is    
amended-- 7#a7 by striking stock or     
securities each place it appears and    
inserting specified assets1 and  7#b7 by
 striking shares of each place it       
appears4  7b7 ,specified asset ,section 
#ajia of such ,code is amended by adding
 at the end the following new           
subsection3  7g7 ,specified asset ,for  

purposes of this section-- 7#a7 ,in     
general ,the term specified asset       
means-- 7,a7 any stock or security1 and 
7,b7 any traded digital asset 7other    
than a qualified ,u4,s4 dollar          
stablecoin74  7#b7 ,treatment of        
tokenized digital assets as             
substantially identical to an           
economically equivalent stock or        
security ,a tokenized digital asset 7or 
a bridged digital asset with respect to 
which the reference digital asset is a  
traded digital asset7 shall be treated  
as substantially identical to any stock1
 security1 or traded digital asset if   
such tokenized digital asset 7or such   
bridged digital asset7 is economically  
equivalent to such stock1 security1 or  
traded digital asset4  4  7c7 ,exception
 for certain acquisitions of digital    
assets ,section #ajia of such ,code1 as 
amended by subsection 7b71 is further   
amended by adding at the end the        
following new subsection3  7h7          
,exception for certain acquisitions of  

digital assets ,this section shall not  
apply with respect to the acquisition of
 a digital asset if such digital asset  
is acquired-- 7#a7 in connection with   
the validation of digital asset         
transactions 7including digital asset   
validation supporting activities71 or   
7#b7 in a transaction which is part of a
 regular or periodic series of          
acquisitions of digital assets which are
 included by the taxpayer as ordinary   
income4  4  7d7 ,exception for certain  
mark-to-,market positions ,section #ajia
 of such ,code1 as amended by           
subsections 7b7 and 7c71 is further     
amended by adding at the end the        
following new subsection3  7i7          
,exception for certain mark-to-,market  
positions  ,this section shall not apply
 with respect to any specified asset to 
which subsection 7a7 of section #dge    
applies 7including by reason of an      
election under subsection 7e71 7f71 or  
7g7 of such section74  4  7e7           
,conforming amendments  7#a7 ,sections  

#cab7;f77#a7 and #abef7;f77#e7 of the   
,internal ,revenue ,code of #aihf are   
each amended by striking stock or       
securities and inserting specified      
assets4  7#b7 ,clause 7ii7 of section   
#fjde7;g77#b77;,b7 of such ,code is     
amended to read as follows3  7ii7       
,exception for wash sales  7,i7 ,in     
general ,except as otherwise provided by
 the ,secretary1 the customer's adjusted
 basis shall be determined without      
regard to section #ajia 7relating to    
loss from wash sales of specified       
assets7 unless the transactions occur in
 the same account with respect to       
identical specified assets4  7,,ii7     
,tokenized digital assets ,for purposes 
of subclause 7,i71 a tokenized digital  
asset and a specified asset that is not 
a tokenized digital asset shall be      
treated as identical specified assets   
only if such tokenized digital asset is 
a direct digital representation of such 
other specified asset  4  7#c7 ,section 
#ajia7;e7 of such ,code 7as amended by  

subsection 7a77 is amended to read as   
follows3  7e7 ,certain short sales of   
specified assets and specified asset    
futures contracts ,to sell ,rules       
similar to the rules of subsection 7a7  
shall apply to any loss realized on the 
closing of a short sale of 7or the sale1
 exchange1 or termination of a specified
 asset futures contract to sell7        
specified assets if1 within a period    
beginning #cj days before the date of   
such closing and ending #cj days after  
such date--  7#a7 substantially         
identical specified assets were sold1 or
  7#b7 another short sale of 7or        
specified asset futures contracts to    
sell7 substantially identical specified 
assets was entered into4  ,for purposes 
of this subsection1 the term specified  
asset futures contract has the same     
meaning given the term securities       
futures contract under section          
#abcd;,b7c71 except that such term shall
 include a contract for the future      
delivery of a digital asset4  4  7#d7   

,the heading of section #ajia of such   
,code is amended by striking stock or   
securities and inserting specified      
assets4  7#e7 ,the headings of          
subsections 7b71 7c71 and 7d7 of section
 #ajia of such ,code are each amended by
 striking ,stock each place it appears  
and inserting ,specified ,assets4  7#f7 
,the item relating to section #ajia in  
the table of sections for part ,,vii of 
subchapter ,o of chapter #a of such     
,code is amended by striking stock or   
securities and inserting specified      
assets4  7f7 ,effective dates  7#a7 ,in 
general ,except as provided under       
paragraphs 7#b7 and 7#c71 the amendments
 made by this section shall apply to    
sales1 dispositions1 and terminations   
after the date of enactment of this     
,act4  7#b7 ,exception for certain      
acquisitions ,for purposes of the       
application of section #ajia of the     
,internal ,revenue ,code of #aihf with  
respect to any digital asset acquired   
before the date of enactment of this    

,act1 the amendments made by this       
section shall be deemed to not apply4   
7#c7 ,transition rule for broker        
reporting ,for purposes of the          
application of section #fjde7;g7 of the 
,internal ,revenue ,code of #aihf with  
respect to any sales1 dispositions1 and 
terminations of any digital assets that 
are not securities before ,january #a1  
#bjbh1 the amendments made by this      
section shall be deemed to not apply4   
#h4 ,treatment of trusts and publicly   
traded partnerships holding digital     
assets  7a7 ,trusts  7#a7 ,in general   
,section #ggja of the ,internal ,revenue
 ,code of #aihf is amended-- 7,a7 by    
redesignating subsection 7p7 as         
subsection 7q71 and  7,b7 by inserting  
after subsection 7o7 the following new  
subsection3  7p7 ,tax treatment of      
certain digital asset investment trusts 
7#a7 ,in general ,for purposes of this  
title1 in the case of a covered digital 
asset investment trust formed to hold   
digital assets-- 7,a7 any power held by 

the trustee to stake or unstake digital 
assets1 whether directly or through     
delegation to another party1 and to     
perform any related acts to exercise    
such power to stake1 including the      
retention of staking rewards1 shall not 
be treated as a power under such trust  
agreement to vary the investment of the 
certificate holders of such trust and   
shall not otherwise disqualify an entity
 from characterization as an investment 
trust that is not classified as a       
business entity under this section1     
7,b7 discretionary powers held by a     
trustee to use other measures1 including
 a borrowing facility1 to manage the    
trust's potential need for assets       
available to satisfy redemptions shall  
not be treated as a power under the     
applicable trust agreement to vary the  
investment of the certificate holders of
 such trust1 and  7,c7 discretionary    
powers held by a trustee to act in      
response to changes to technology       
supporting the digital assets held by   

the trust1 including with regard to     
staking1 shall not be treated as a power
 under the applicable trust agreement to
 vary the investment of the certificate 
holders of such trust4  7#b7            
,nonapplication to validating trade or  
business ,this subsection shall not     
apply in the case of any entity or      
arrangement engaged in the active       
conduct of a trade or business of       
validating digital asset transactions4  
7#c7 ,covered digital asset investment  
trust ,for purposes of this subsection1 
the term covered digital asset          
investment trust means a trust which    
satisfies each of the following         
requirements3 7,a7 ,the trust is traded 
on a national securities exchange which 
is registered with the ,securities and  
,exchange ,commission and complies with 
any applicable rules and regulations    
established by such ,commission4  7,b7  
,the trust only holds units of a single 
digital asset and any transactions with 
respect to such units are carried out on

 a network that uses a proof-of-stake   
consensus mechanism4  7,c7 ,the trust's 
digital assets are held by a qualified  
custodian on behalf of the trust at     
digital asset addresses controlled by   
such custodian4  7,d7 ,the trust directs
 staking of its digital assets through  
#a or more custodians who facilitate the
 staking of the digital assets on behalf
 of the trust with #a or more staking   
providers1 subject to terms consistent  
with those that would be agreed to      
between unrelated persons dealing at    
arm's length under comparable           
circumstances4  7#d7 ,regulations and   
guidance ,the ,secretary shall prescribe
 such regulations or other guidance as  
may be necessary and appropriate to     
carry out the purposes of this          
subsection  4  7#b7 ,effective date     
7,a7 ,in general ,subject to            
subparagraph 7,b71 the amendments made  
by this subsection shall apply to       
taxable years beginning after ,december 
#ca1 #bjbf4  7,b7 ,election ,at the     

election of the taxpayer1 the amendments
 made by this subsection may apply to   
any taxable years beginning before      
,january #a1 #bjbg4 ,no inference may be
 drawn from the amendments made by this 
subsection with respect to the absence  
of explicit rules during such taxable   
years4  7b7 ,publicly traded partnership
  7#a7 ,in general ,section             
#ggjd7;d77#a7 of the ,internal ,revenue 
,code of #aihf is amended-- 7,a7 in     
subparagraph 7,f71 by striking and at   
the end1  7,b7 in subparagraph 7,g71 by 
striking the period at the end and      
inserting 1 and1  7,c7 by inserting     
after subparagraph 7,g7 the following   
new paragraph3  7,h7 7i7 staking        
rewards1 to the extent includible in    
gross income1  7ii7 payments with       
respect to applicable asset loans 7as   
defined in section #eab7;a77#e77 to the 
extent attributable to traded digital   
assets1 or  7iii7 gains from the sale or
 exchange of-- 7,i7 digital assets      
7other than those described in section  

#abba7;a77#a7 in the hands of the       
taxpayer71 or  7,,ii7 futures contracts1
 forward contracts1 or options with     
respect to digital assets4  1 and  7,d7 
in the flush text following subparagraph
 7,h71 by adding at the end the         
following3 ,for purposes of subparagraph
 7,h71 qualifying income shall not      
include income or gain derived from     
operating a digital asset exchange1     
lending platform1 broker1 dealer1 or    
other digital asset financial services  
business for a spread1 commission1 fee1 
or similar compensation44  7#b7         
,effective date ,the amendments made by 
this subsection shall apply to taxable  
years beginning after ,december #ca1    
#bjbf4  #i4 ,application of constructive
 sale rules to digital assets  7a7 ,in  
general ,section #abei of the ,internal 
,revenue ,code of #aihf is amended--    
7#a7 in subsection 7b77#a71 by inserting
 #8#8digital asset 7other than a        
qualified ,u4,s4 dollar stablecoin71''  
after #8#8debt instrument1''1 and  7#b7 

in subsection 7c7-- 7,a7 in paragraph   
7#b71 by inserting or widely traded     
digital asset after marketable security 
7as defined in section #dec7;f771 and   
7,b7 by adding at the end the following 
new paragraph3  7#e7 ,treatment of      
tokenized digital assets as             
substantially identical to economically 
equivalent financial property ,a        
tokenized digital asset 7or a bridged   
digital asset with respect to which the 
reference digital asset is a traded     
digital asset7 shall be treated as      
substantially identical to any stock1   
debt instrument1 partnership interest1  
or widely traded digital asset if such  
tokenized digital asset 7or such bridged
 digital asset7 is economically         
equivalent to such stock1 debt          
instrument1 partnership interest1 or    
widely traded digital asset4  4  7b7    
,effective date  7#a7 ,in general ,the  
amendments made by this section shall   
apply to constructive sales after the   
date of enactment of this ,act4  7#b7   

,rule of construction ,no transaction   
entered into on or before the date of   
enactment of this ,act shall be deemed  
to cause or result in a constructive    
sale by reason of the amendments made by
 this section4  #aj4 ,charitable        
contributions of widely traded digital  
assets  7a7 ,exception from appraisal   
requirements ,section                   
#agj7;f77#aa77;,a77ii77,i7 of the       
,internal ,revenue ,code of #aihf is    
amended by inserting widely traded      
digital assets 7except as the ,secretary
 determines appropriate to prevent abuse
 of this section71 after publicly traded
 securities 7as defined in section      
#fjej,l7a77#b77;,b7714  7b7 ,effective  
date ,the amendment made by this section
 shall apply to taxable years beginning 
after ,december #ca1 #bjbf4  #aa4       
,treatment of de minimis digital asset  
network fees  7a7 ,in general ,part     
,,iii of subchapter ,o of chapter #a of 
the ,internal ,revenue ,code of #aihf1  
as amended by section #b1 is amended by 

inserting after section #ajdc the       
following new section3  #ajdd4 ,de      
minimis network fee exception  7a7 ,in  
general ,no gain or loss shall be       
recognized with respect to any qualified
 transaction cost disposition4  7b7     
,qualified transaction cost disposition 
,for purposes of this section1 the term 
qualified transaction cost disposition  
means the disposition of a digital asset
 by a taxpayer-- 7#a7 in satisfaction of
 a digital asset transaction cost paid  
or incurred by the taxpayer1 including a
 disposition resulting from the         
withholding of a digital asset from an  
amount transferred or received by the   
taxpayer1 and  7#b7 with respect to     
which the aggregate fair market value of
 all digital assets disposed of by the  
taxpayer in satisfaction of digital     
asset transaction costs relating to such
 transaction does not exceed #aj4  7c7  
,digital asset transaction cost  7#a7   
,in general ,for purposes of this       
section1 the term digital asset         

transaction cost means any amount paid  
in cash or property 7including a digital
 asset7 to effect the sale1 disposition1
 or acquisition of a digital asset1     
including transaction fees1 transfer    
taxes1 commissions1 and network fees    
paid or incurred with respect to any    
digital asset transaction initiated by  
the taxpayer and recorded on a          
cryptographically secured distributed   
ledger4  7#b7 ,network fee ,for purposes
 of paragraph 7#a71 the term network fee
 means any amount paid or incurred to   
cause1 facilitate1 expedite1 or         
prioritize the execution1 validation1   
settlement1 or recording of a digital   
asset transaction on a cryptographically
 secured distributed ledger or similar  
technology1 including any base fee1 gas 
fee1 priority fee1 tip1 or similar      
amount1 without regard to-- 7,a7 whether
 payment of such amount is mandatory or 
elective1 or  7,b7 whether such amount  
is paid or transferred to a person1 paid
 or transferred to a protocol1 burned1  

destroyed1 or otherwise removed from    
circulation4  7d7 ,aggregation rule     
7#a7 ,in general ,for purposes of       
subsection 7b77#b7-- 7,a7 all digital   
assets disposed of in satisfaction of   
digital asset transaction costs relating
 to the same economic transaction shall 
be aggregated1 including a series of    
related economic transactions structured
 for the purpose of avoiding the        
limitation under such subsection1 and   
7,b7 any digital asset transaction cost 
paid or incurred to effect the          
disposition of a digital asset used to  
pay another digital asset transaction   
cost shall be treated as relating to the
 transaction to which such other cost   
relates4  7#b7 ,limitation ,for purposes
 of paragraph 7#a71 transactions shall  
not be aggregated solely because such   
transactions are executed through the   
same account1 wallet1 protocol1 program1
 smart contract1 or automated strategy4 
7e7 ,determination of fair market value 
,for purposes of subsection 7b77#b71 the

 fair market value of a digital asset   
shall be determined as of the date and  
time of the disposition of such digital 
asset4  7f7 ,coordination with treatment
 of transaction costs ,nothing in this  
section shall be deemed to modify the   
capitalization1 allocation1 or other    
treatment of a digital asset transaction
 cost4  7g7 ,treatment of unrecognized  
gain ,the amount of any digital asset   
transaction cost which would otherwise  
be taken into account in determining the
 amount of gain or loss on the          
disposition of any asset1 in determining
 the amount of any deduction1 or in     
determining the basis of any asset      
acquired1 shall be reduced by the amount
 of any gain or increased by the amount 
of any loss not recognized by reason of 
subsection 7a7 with respect to the      
disposition of the digital asset used to
 pay such digital asset transaction     
cost4  7h7 ,exclusions  7#a7 ,trade or  
business ,subsection 7a7 shall not apply
 to the disposition of a digital asset  

by-- 7,a7 a trader1 broker1 or dealer in
 digital assets1  7,b7 a person in the  
trade or business of batching or        
facilitating the validation of digital  
asset transactions on behalf of others1 
7,c7 to the extent provided by the      
,secretary1 any person in a trade or    
business which is substantially similar 
to a trade or business described in     
subparagraph 7,a7 or 7,b71 or  7,d7 any 
person that initiated more than #e1jjj  
digital asset transactions during the   
preceding taxable year4  7#b7 ,certain  
accounting methods ,subsection 7a7 shall
 not apply to any digital asset-- 7,a7  
to which section #dge or #abef7;a7      
applies1 or  7,b7 except as otherwise   
provided by the ,secretary1 to which a  
mark-to-market method applies under any 
other provision of this subtitle4  7i7  
,regulations ,the ,secretary shall issue
 such regulations or other guidance as  
may be necessary or appropriate to carry
 out the purposes of this section1      
including regulations or guidance to    

prevent the abuse of this section       
through transaction structuring for the 
purpose of qualifying for the exclusion 
provided in subsection 7a74  4  7b7     
,exemption from information reporting   
,section #fjde7;i7 of such ,code1 as    
added by section #b of this ,act1 is    
amended-- 7#a7 by redesignating         
paragraph 7#b7 as paragraph 7#c71 and   
7#b7 by inserting after paragraph 7#a7  
the following new paragraph3  7#b7 ,de  
minimis network fee exception  7,a7 ,in 
general ,except as otherwise provided by
 the ,secretary or under subparagraph   
7,b71 in the case of the disposition of 
a digital asset to which section        
#ajdd7;a7 applies1 subsection 7a7 shall 
not apply with respect to such          
disposition4  7,b7 ,aggregate           
information ,with respect to any        
dispositions described in subparagraph  
7,a71 a broker shall include in the     
return under subsection 7a7 such        
aggregate information relating to such  
dispositions as the ,secretary          

determines necessary or appropriate1    
including for purposes of verifying the 
taxpayer's basis in digital assets held 
by the taxpayer4  4  7c7 ,exception from
 wash sale rules ,section #ajia of the  
,internal ,revenue ,code of #aihf1 as   
amended by this ,act1 is further amended
 by adding at the end the following new 
subsection3  7j7 ,exception for         
qualified transaction cost dispositions 
,this section shall not apply with      
respect to any qualified transaction    
cost disposition 7as defined in section 
#ajdd7;b774  4  7d7 ,clerical amendment 
,the table of sections for part ,,iii of
 subchapter ,o of chapter #a of the     
,internal ,revenue ,code of #aihf is    
amended by inserting after the item     
relating to section #ajdc the following 
new item3  ,sec4 #ajdd4 ,de minimis     
network fee exception4  4  7e7          
,effective date ,the amendments made by 
this section shall apply to the         
disposition of assets after ,december   
#ca1 #bjbf4  #ab4 ,treatment of income  

from qualified digital asset validation 
activity by tax-exempt entities  7a7    
,treatment under unrelated business     
taxable income  7#a7 ,in general        
,section #eab7;b7 of the ,internal      
,revenue ,code of #aihf is amended by   
adding at the end the following new     
paragraph3  7#bj7 ,certain digital asset
 validation income  7,a7 ,in general    
,there shall be excluded income from    
qualified digital asset validation      
activity1 and all deductions directly   
connected with such income4  7,b7       
,qualified digital asset validation     
activity  7i7 ,in general ,for purposes 
of this subsection1 the term qualified  
digital asset validation activity means 
any activity-- 7,i7 which involves      
digital asset validation supporting     
activities1 and  7,,ii7 in which the    
taxpayer does not substantially         
participate4  7ii7 ,substantial         
participation ,for purposes of clause   
7i77,,ii71 a taxpayer shall be treated  
as not substantially participating in an

 activity described in clause 7i77,i7 if
 the taxpayer-- 7,i7 owns the digital   
assets and delegates validation rights  
to another person on terms consistent   
with those that would be agreed to      
between unrelated persons dealing at    
arm's length under comparable           
circumstances1  7,,ii7 does not operate 
the validator nodes and does not control
 validator selection beyond delegation  
and committing or uncommitting tokens to
 the validation network1 and  7,,iii7   
does not undertake other activity that  
seeks to control the activity described 
in clause 7i77,i74  4  7#b7             
,debt-financed property ,section        
#eab7;b77#d7 of such ,code is amended by
 striking or 7#e7 and inserting 7#e71 or
 7#bj74  7b7 ,regulations ,the          
,secretary of the ,treasury 7or the     
,secretary's delegate7 shall issue such 
regulations or other guidance as may be 
necessary or appropriate to carry out   
the purposes of the amendments made by  
this section1 including regulations or  

guidance to prevent the abuse of such   
amendments4  7c7 ,effective date ,the   
amendments made by this section shall   
apply to taxable years beginning after  
,december #ca1 #bjbf4  #ac4 ,application
 of registration-required obligation    
rules  7a7 ,exception for qualified     
,u4,s4 dollar stablecoins ,section      
#afc7;f77#b77;,a7 of the ,internal      
,revenue ,code of #aihf is amended--    
7#a7 by striking or at the end of clause
 7ii71  7#b7 by striking the period at  
the end of clause 7iii7 and inserting 1 
or1 and  7#c7 by adding at the end the  
following new clause3  7iv7 is a        
qualified ,u4,s4 dollar stablecoin4  4  
7b7 ,clarification of treatment of      
digital assets ,section #dgja of such   
,code is amended by adding at the end   
the following new subsection3  7c7      
,digital assets  7#a7 ,location of      
disclosure statement ,in the case of any
 digital asset1 the requirement of      
clause 7iii7 of subsection 7b77#a77;,b7 
shall be treated as satisfied if the    

statement described therein is included 
in all written terms or marketing       
materials with respect to such digital  
asset and in such other locations or    
documents as the ,secretary may         
prescribe in regulations4  7#b7         
,treatment of digital assets without a  
fixed maturity date ,in the case of any 
digital asset that does not have a fixed
 maturity date at issue1 the date of    
maturity of such asset for purposes of  
subsection 7a77#b7 shall be treated as  
the date that is #be years after the    
date of issuance of such digital asset4 
4  7c7 ,effective date  7#a7 ,in general
 ,except as otherwise provided in this  
subsection1 the amendments made by this 
section shall apply to taxable years    
ending after the date of enactment of   
this ,act4  7#b7 ,clarification of      
treatment of digital assets without a   
fixed maturity date ,the amendment made 
by subsection 7b7 shall apply to digital
 assets issued after the date of        
enactment of this ,act4  #ad4 ,treatment

 of certain foreign entities established
 in connection with decentralized       
autonomous organizations  7a7 ,in       
general ,not later than#ab months after 
the date of the enactment of this ,act1 
the ,secretary of the ,treasury 7or the 
,secretary's delegate7 shall issue      
regulations or other guidance to clarify
 the appropriate tax treatment of       
reorganizations of applicable foreign   
entities 7and ,united ,states persons   
related to such entities or involved in 
the governance of such entities74  7b7  
,matters included ,the regulations or   
other guidance issued under subsection  
7a7 shall-- 7#a7 clarify the methods by 
which applicable foreign entities may   
reorganize as domestic corporations     
under subchapter ,c of chapter #a of the
 ,internal ,revenue ,code of #aihf1 and 
7#b7 provide1 in appropriate            
circumstances1 temporary safe harbors to
 encourage applicable foreign entities  
organized before ,september #bd1 #bjbf1 
to complete such reorganizations        

promptly after the date of the enactment
 of this ,act4  7c7 ,applicable foreign 
entity ,for purposes of this section1   
the term applicable foreign entity means
 an entity which is established-- 7#a7  
in connection with an organization      
commonly referred to as decentralized   
autonomous organizations1 and  7#b7 in a
 foreign country as a foundation under  
foreign law 7or other similar structure 
with a purported purpose other than     
profit74  #ae4 ,definitions  7a7 ,in    
general ,section #ggja of the ,internal 
,revenue ,code of #aihf1 as amended by  
section #h of this ,act1 is further     
amended-- 7#a7 by redesignating         
subsection 7q7 as subsection 7r71 and   
7#b7 by inserting after subsection 7p7  
the following new subsection3  7q7      
,definitions related to digital assets  
,for purposes of this title-- 7#a7      
,bridged digital asset ,except as       
otherwise provided by the ,secretary1   
the term bridged digital asset means any
 digital asset if such asset-- 7,a7 is  

redeemable on demand1 on a one-for-one  
basis1 for another digital asset1 and   
7,b7 is recorded on a cryptographically 
secured distributed ledger other than   
the cryptographically secured           
distributed ledger on which the digital 
asset referred to in subparagraph 7,a7  
is recorded4  7#b7 ,digital asset       
,except as otherwise provided by the    
,secretary1 the term digital asset means
 any digital representation of value    
which is recorded on a cryptographically
 secured distributed ledger or any      
similar technology as specified by the  
,secretary4  7#c7 ,digital asset        
transaction ,the term digital asset     
transaction means any transaction1      
instruction1 or other operation         
submitted for execution and recorded on 
the cryptographically secured           
distributed ledger 7or similar          
technology7 referred to in paragraph    
7#b71 regardless of whether such        
transaction1 instruction1 or other      
operation transfers a digital asset or  

is successfully executed4  7#d7 ,digital
 asset validation supporting activities 
,the term digital asset validation      
supporting activities means staking1    
mining1 or similar activities in support
 of the validation of digital asset     
transactions4  7#e7 ,mining  7,a7 ,in   
general ,the term mining1 when used in  
connection with a digital asset1 means--
 7i7 performing computations1 or making 
available computing power1 in support of
 the validation of digital asset        
transactions on a cryptographically     
secured distributed ledger that uses a  
proof-of-work consensus mechanism1 and  
7ii7 except as otherwise provided by the
 ,secretary1 any activity which is      
substantially similar to an activity    
described in clause 7i74  7,b7          
,exception ,the term mining does not    
include staking or the operation of a   
validator node on a cryptographically   
secured distributed ledger that uses a  
proof-of-stake consensus mechanism4     
7#f7 ,qualified ,u4,s4 dollar stablecoin

  7,a7 ,in general ,the term qualified  
,u4,s4 dollar stablecoin means any      
,u4,s4 dollar stablecoin which is issued
 by-- 7i7 a permitted payment stablecoin
 issuer 7as defined in section #b7bc7 of
 the ,,genius ,act1 as in effect on the 
date of the enactment of this           
subsection71 or  7ii7 a foreign payment 
stablecoin issuer 7as defined in section
 #b7ab7 of the ,,genius ,act1 as so in  
effect7 authorized to issue such ,u4,s4 
dollar stablecoin to ,united ,states    
persons by reason of-- 7,i7 registration
 with the ,office of the ,comptroller of
 the ,currency under the ,,genius ,act  
7as so in effect71 or  7,,ii7 a         
determination by the ,secretary under   
such ,act that the regulatory and       
supervisory regime of the jurisdiction  
in which such issuer is organized is    
comparable to the requirements of such  
,act4  7,b7 ,exception ,for purposes of 
subparagraph 7,a77ii71 a foreign payment
 stablecoin issuer shall not be treated 
as authorized to issue a ,u4,s4 dollar  

stablecoin under such subparagraph by   
reason of the absence of a prohibition  
on the offer or sale of such ,u4,s4     
dollar stablecoin in the ,united        
,states4  7#g7 ,receipt token  7,a7 ,in 
general ,except as otherwise provided by
 the ,secretary1 the term receipt token 
means any digital asset 7other than a   
bridged digital asset7 that is readily  
redeemable1 directly or through a       
protocol or similar arrangement1 for a  
determinable amount of #a or more other 
digital assets 7referred to in this     
subsection as underlying digital        
assets71 without regard to whether-- 7i7
 such receipt token and any underlying  
digital asset are recorded on the same  
cryptographically secured distributed   
ledger1  7ii7 the amount of underlying  
digital assets for which such receipt   
token is redeemable varies over time1 or
  7iii7 redemption is subject to a      
waiting period1 queue1 or similar delay 
imposed by the protocol4  7,b7 ,tiered  
receipt tokens ,if any underlying       

digital asset with respect to a receipt 
token is itself a receipt token or a    
bridged digital asset-- 7i7 the         
underlying digital assets or reference  
digital asset of such asset shall be    
treated as underlying digital assets of 
the first receipt token1 and  7ii7 rules
 similar to the rules of subparagraphs  
7,b7 and 7,c7 of paragraph 7#h7 shall   
apply4  7#h7 ,reference digital asset   
7,a7 ,in general ,the term reference    
digital asset means1 with respect to any
 bridged digital asset1 the digital     
asset referred to in paragraph          
7#a77;,a74  7,b7 ,special rule for      
rewrappings ,if1 but for this           
subparagraph1 the reference digital     
asset with respect to any bridged       
digital asset would be a bridged digital
 asset 7referred to in this paragraph as
 the lower-tier bridged digital asset7--
 7i7 subparagraph 7,a7 shall be applied 
with respect to the lower-tier bridged  
digital asset1 and  7ii7 the reference  
digital asset with respect to such      

lower-tier bridged digital asset shall  
be treated as the reference digital     
asset of such bridged digital asset4    
7,c7 ,multiple wrappings ,if1 after the 
application of subparagraph 7,b71 the   
reference digital asset with respect to 
the lower-tier bridged digital asset is 
a bridged digital asset1 such           
subparagraph shall be reapplied by      
treating such lower-tier bridged digital
 asset as the bridged digital asset4    
7#i7 ,staking ,the term staking1 when   
used in connection with a digital asset1
 means-- 7,a7 making such asset         
available in support of the validation  
of digital asset transactions1 and  7,b7
 to the extent provided by the          
,secretary1 any activity which is       
substantially similar to an activity    
described in subparagraph 7,a74  7#aj7  
,staking reward  7,a7 ,in general ,the  
term staking reward means any additional
 units of a digital asset1 or portions  
thereof1 that are created or issued by  
the protocol itself as part of          

validation and allocated to a taxpayer  
7directly or through #a or more agents  
or pools7 as a result of the taxpayer's 
direct or indirect participation in     
digital asset validation supporting     
activities of a distributed ledger4     
7,b7 ,exclusion for service compensation
  7i7 ,in general ,the term staking     
reward shall not include any fee1       
commission1 spread1 or other amount     
received for providing validation1      
staking1 exchange1 lending1 or other    
digital asset financial services to     
another person4  7ii7 ,exception ,for   
purposes of clause 7i71 a               
protocol-issued reward shall not be     
treated as compensation for providing   
digital asset financial services merely 
because the taxpayer directly validates 
transactions or delegates digital assets
 to a validator4  7#aa7 ,tokenized      
digital asset ,the term tokenized       
digital asset means any digital asset   
7other than a qualified ,u4,s4 dollar   
stablecoin7 that is a digital           

representation of all rights1           
obligations1 or interests in a tangible 
or intangible asset that is not itself a
 digital asset4  7#ab7 ,traded digital  
asset ,except as otherwise provided by  
the ,secretary1 the term traded digital 
asset means any digital asset if-- 7,a7 
such asset is fungible1  7,b7 quotations
 of such asset are readily available or 
readily ascertainable on #a or more     
exchanges and reflect trading in        
sufficient volume and with sufficient   
liquidity to provide reliable price     
discovery1 and  7,c7 such asset is      
either-- 7i7 not a tokenized digital    
asset1  7ii7 a bridged digital asset    
with respect to which the reference     
digital asset is a traded digital asset1
 or  7iii7 a receipt token with respect 
to which each underlying digital asset  
is a traded digital asset4  7#ac7 ,u4,s4
 dollar stablecoin ,the term ,u4,s4     
dollar stablecoin means a payment       
stablecoin as defined in section #b7bb7 
of the ,,genius ,act 7as in effect on   

the date of the enactment of this       
subsection7 applied by substituting     
dollars for monetary value each place it
 appears in such section4  7#ad7        
,validation ,the term validate1 and any 
derivative of such term 7including      
validation71 when used in connection    
with a digital asset transaction1 means 
participating in a consensus process of 
a cryptographically secured distributed 
ledger by proposing1 attesting to1      
verifying1 ordering1 recording1 or      
otherwise confirming transactions or    
blocks4  7#ae7 ,widely traded digital   
asset  7,a7 ,in general ,except as      
otherwise provided by the ,secretary1   
the term widely traded digital asset    
means1 for any taxable year1 any traded 
digital asset if-- 7i7 quotations for   
such asset were readily available on an 
exchange for the entirety of the        
immediately preceding calendar year1    
7ii7 the market capitalization of such  
asset exceeded #ejj1jjj1jjj at          
substantially all times during such     

calendar year1 and  7iii7 not more than 
#aj percent of the units of such asset  
were owned1 directly or indirectly1 by  
the taxpayer or any person described    
with respect to the taxpayer under      
section #bfg7;b7 7applied without regard
 to section #bfg7;c77#c77 or section    
#gjg7;b77#a7 at any time during such    
taxable year or the immediately         
preceding taxable year4  7,b7 ,special  
rule for bridged digital assets ,except 
as otherwise provided by the ,secretary1
 in the case of any bridged digital     
asset1 such asset shall be treated as a 
widely traded digital asset if the      
reference digital asset with respect to 
such bridged digital asset is a widely  
traded digital asset4  7,c7 ,authority  
to ensure reliable price discovery ,for 
purposes of subparagraphs 7,a7 and 7,b71
 the ,secretary may exclude any asset   
that lacks reliable price discovery or  
that the ,secretary determines is at    
risk of price manipulation4  7,d7       
,authority to adjust requirements ,the  

,secretary may1 by regulation1 provide  
requirements that apply in lieu of #a or
 more of the requirements of clauses 7i7
 through 7iii7 of subparagraph 7,a7 if  
the ,secretary determines that1 due to  
changes in market conditions 7including 
by reason of the enactment of ,federal  
legislation relating to digital asset   
market structure71 such alternative     
requirements would more effectively or  
efficiently identify traded digital     
assets for which there is consistent and
 reliable price discovery4  7,e7        
,special rule for receipt tokens ,except
 as otherwise provided by the           
,secretary1 a receipt token shall be    
treated as a widely traded digital asset
 if each underlying digital asset with  
respect to such receipt token is a      
widely traded digital asset4  7,f7      
,inflation adjustment ,in the case of   
any calendar year after #bjbg1 the      
#ejj1jjj1jjj amount in subparagraph     
7,a77ii7 shall be increased by an amount
 equal to-- 7i7 such dollar amount1     

multiplied by  7ii7 the cost-of-living  
adjustment determined under section     
#a7;f77#c7 for such calendar year1      
determined by substituting calendar year
 #bjbf for calendar year #bjaf in       
subparagraph 7,a77ii7 thereof4  ,any    
increase determined under the preceding 
sentence which is not a multiple of     
#ajj1jjj shall be rounded to the nearest
 multiple of #ajj1jjj4  4  7b7          
,conforming amendments  7#a7 ,section   
#fjde7;g77#c7 of the ,internal ,revenue 
,code of #aihf is amended by striking   
subparagraph 7,d74  7#b7 ,section       
#fjej;,i7d77#c7 of such ,code is amended
 by striking 7as defined in section     
#fjde7;g77#c77;,d774