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[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 9176 Introduced in House (IH)]
<DOC>
119th CONGRESS
2d Session
H. R. 9176
To amend the Internal Revenue Code of 1986 to clarify the application
of certain rules with respect to the trading of digital assets, and for
other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 8, 2026
Mr. Kustoff introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to clarify the application
of certain rules with respect to the trading of digital assets, and for
other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) Short Title.--This Act may be cited as the ``Providing
Analogous Rules for Digital Assets Act'' or the ``PAR Act''.
(b) References.--Except as otherwise expressly provided, whenever
in this Act an amendment or repeal is expressed in terms of an
amendment to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provision of the
Internal Revenue Code of 1986.
(c) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; etc.
Sec. 2. Transfers of traded digital assets pursuant to a lending
agreement.
Sec. 3. Dealers and traders of widely traded digital assets.
Sec. 4. Digital asset trading safe harbor.
Sec. 5. Definitions.
Sec. 6. Rules of construction.
SEC. 2. TRANSFERS OF TRADED DIGITAL ASSETS PURSUANT TO A LENDING
AGREEMENT.
(a) In General.--Subsections (a) and (b) of section 1058 are each
amended by striking ``securities'' each place it appears and inserting
``specified assets''.
(b) Specified Assets.--Section 1058 is amended by adding at the end
the following new subsection:
``(d) Specified Assets.--For purposes of this section, the term
`specified assets' means--
``(1) securities (as defined in section 1236(c)), and
``(2) traded digital assets.''.
(c) Treatment of Certain Legal Entitlements and Obligations Which
Accrue During Period of Agreement.--Section 1058(b)(2) is amended to
read as follows:
``(2) require that--
``(A) payments shall be made to the transferor of
amounts equivalent to, except as otherwise provided by
the Secretary, all interest, dividends, property, legal
entitlements, and other distributions which the owner
of the specified assets is entitled to receive during
the period beginning with the transfer of the specified
assets by the transferor and ending with the transfer
of identical specified assets back to the transferor,
and
``(B) in the case of any transfer of traded digital
assets, the transferor shall assume all obligations
imposed on the owner of such traded digital assets
during the period described in subparagraph (A),''.
(d) Conforming Amendments.--
(1) Section 1058(a) is amended by striking ``(as defined in
section 1236(c))''.
(2) The heading of section 1058, and the item relating to
section 1058 in the table of sections for part IV of subchapter
O of chapter 1, are each amended by striking ``securities'' and
inserting ``specified assets''.
(e) Effective Date.--The amendments made by this section shall
apply to transfers made after the date of the enactment of this Act.
SEC. 3. DEALERS AND TRADERS OF WIDELY TRADED DIGITAL ASSETS.
(a) In General.--Section 475 is amended by redesignating subsection
(g) as subsection (h) and by inserting after subsection (f) the
following new subsection:
``(g) Election of Mark to Market for Dealers in Covered Digital
Assets.--
``(1) In general.--In the case of a dealer in covered
digital assets who elects the application of this subsection,
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 securities.
``(2) Covered digital asset.--For purposes of this section,
the term `covered digital asset' means--
``(A) any widely traded digital asset,
``(B) any notional principal contract with respect
to any widely traded digital asset,
``(C) any evidence of an interest in, or a
derivative instrument in, any widely traded digital
asset described in subparagraph (A) or (B), including
any option, forward contract, futures contract, short
position, and any similar instrument in such widely
traded digital asset, and
``(D) any position which--
``(i) is not a covered digital asset
described in subparagraph (A), (B), or (C),
``(ii) is a hedge with respect to such a
covered digital asset, and
``(iii) is clearly identified in the
taxpayer's records as being described in this
subparagraph before the close of the day on
which it was acquired or entered into (or such
other time as the Secretary may by regulations
prescribe).
``(3) Election.--An election under this subsection may be
made without the consent of the Secretary. Such an election,
once made, shall apply to the taxable year for which made and
all subsequent taxable years unless revoked with the consent of
the Secretary.''.
(b) Application of Mark to Market Rules to Covered Digital
Assets.--Section 475(f) is amended--
(1) in the heading, by striking ``or Commodities'' and
inserting ``, Commodities, or Covered Digital Assets'',
(2) by redesignating paragraph (3) as paragraph (4) and by
inserting after paragraph (2) the following new paragraph:
``(3) Traders 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, paragraph (1) shall apply to
covered digital assets held by such trader in connection with
such trade or business in the same manner as paragraph (1)
applies to securities held by a trader in securities.'', and
(3) in paragraph (4), as so redesignated, by striking
``paragraphs (1) and (2)'' and inserting ``paragraphs (1), (2),
and (3)''.
(c) Treatment of Covered Digital Assets Which Are Securities or
Commodities.--Section 475(d) is amended by adding at the end the
following new paragraph:
``(4) Treatment of covered digital assets which are
securities or commodities.--In the case of any covered digital
asset which is a security or commodity (determined without
regard to this paragraph), such covered digital asset shall not
be treated as a security or commodity for purposes of
subsections (b) through (g).''.
(d) Treatment of Adjustments Attributable to Election of Mark to
Market.--Section 475(d), as amended by subsection (c), is amended by
adding at the end the following new paragraph:
``(5) Adjustments attributable to mark to market treatment
of securities, commodities, or covered digital assets.--In the
case of an adjustment described in section 481(a) by reason of
the application of subsection (a), (e), (f), or (g) of this
section, 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 (within the meaning of
section 481) under the method of accounting used for such
preceding taxable year.''.
(e) Conforming Amendments.--
(1) Section 475(e)(2) is amended by striking ``this
subsection and subsection (f)'' and inserting ``this section''.
(2) The heading of section 475 is amended by striking
``dealers in securities'' and inserting ``certain dealers and
traders''.
(3) The table of sections for subpart D of part II of
subchapter E of chapter 1 is amended by striking the item
relating to section 475 and inserting the following:
``Sec. 475. Mark to market accounting method for certain dealers and
traders.''.
(f) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
(g) 4-year Spread of Adjustments.--In the case of a taxpayer that
elects under subsection (f)(3) or (g) of section 475 of the Internal
Revenue Code of 1986 (as added by this section) to change such
taxpayer's method of accounting for the taxpayer's first taxable year
beginning after the date of the enactment of this Act--
(1) any identification required with respect to 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 30th day of such taxable year, and
(2) the net amount of the adjustments required to be taken
into account by the taxpayer under section 481 of such Code by
reason of such subsection shall be taken into account ratably
over the 4-taxable year period beginning with such taxable
year.
SEC. 4. DIGITAL ASSET TRADING SAFE HARBOR.
(a) In General.--Section 864(b)(2) is amended--
(1) in the heading, by striking ``or commodities'' and
inserting ``commodities, or traded digital assets'',
(2) by redesignating subparagraph (C) as subparagraph (D)
and by inserting the following new subparagraph after
subparagraph (B):
``(C) Traded digital assets.--
``(i) In general.--Trading in traded
digital assets through a resident broker,
commission agent, custodian, or other
independent agent.
``(ii) Trading for taxpayer's own
account.--Trading in traded digital assets for
the taxpayer's own account, whether by the
taxpayer or his employees or through a resident
broker, commission agent, custodian, or other
agent, and whether or not any such employee or
agent has discretionary authority to make
decisions in effecting the transactions. This
clause shall not apply in the case of a dealer
in digital assets.'', and
(3) in subparagraph (D), as so redesignated, by striking
``and (B)(i)'' and inserting ``, (B)(i), and (C)(i)''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2025.
SEC. 5. DEFINITIONS.
Section 7701 is amended--
(1) by redesignating subsection (p) as subsection (q), and
(2) by inserting after subsection (o) the following new
subsection:
``(p) Definitions Related to Digital Assets.--For purposes of this
title--
``(1) Digital asset.--The term `digital asset' means,
except as otherwise provided by the Secretary, any digital
representation of value which is recorded on a
cryptographically secured distributed ledger or any similar
technology as specified by the Secretary.
``(2) Traded digital asset.--The term `traded digital
asset' means, except as otherwise provided by the Secretary to
prevent abuse, any digital asset if--
``(A) such asset is fungible,
``(B) quotations of such asset are readily
available on an exchange (or, in the case of an
exchange that does not provide quotations, such
quotations are readily ascertainable), and
``(C) such asset is either--
``(i) not a tokenized digital asset, or
``(ii) a wrapped digital asset with respect
to which the reference digital asset is a
traded digital asset.
``(3) Widely traded digital asset.--
``(A) In general.--The term `widely traded digital
asset' means, with respect to any taxpayer for any
taxable year and except as otherwise provided by the
Secretary to prevent abuse, any traded digital asset
if--
``(i) quotations for such asset were
readily available on an exchange for the entire
calendar year which ends in or with the taxable
year preceding such taxable year,
``(ii) the market capitalization of such
asset exceeded $500,000,000 at substantially
all times during such calendar year, and
``(iii) not more than 10 percent of the
units of such asset were owned, directly or
indirectly, by the taxpayer or any person
described with respect to the taxpayer under
section 267(b) (applied without regard to
section 267(c)(3)) or section 707(b)(1) at any
time during such taxable year or such preceding
taxable year.
``(B) Special rule for wrapped digital assets.--In
the case of any wrapped digital asset, except as
otherwise provided by the Secretary to prevent abuse,
such asset shall be treated as a widely traded digital
asset if, and only if, the reference digital asset with
respect to such wrapped digital asset is a widely
traded digital asset.
``(C) Authority to ensure reliable price
discovery.--For purposes of subparagraphs (A) and (B),
the term `prevent abuse' includes the exclusion of
assets that lack reliable price discovery or that the
Secretary determines are at risk of price manipulation.
``(D) Authority to adjust requirements.--The
Secretary may, by regulation, provide requirements that
apply in lieu of one or more of the requirements of
clauses (i) through (iii) of subparagraph (A) if the
Secretary determines that due to changes in market
conditions (including by reason of the enactment of
Federal digital asset market structure legislation)
that such alternative requirements would more
effectively or efficiently identify traded digital
assets for which there is consistent and reliable price
discovery.
``(E) Inflation adjustment.--In the case of any
calendar year after 2027, the $500,000,000 amount in
subparagraph (A)(ii) shall be increased by an amount
equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment
determined under section 1(f)(3) for such
calendar year, determined by substituting
`calendar year 2026' for `calendar year 2016'
in subparagraph (A)(ii) thereof.
Any increase determined under the preceding sentence
which is not a multiple of $100,000 shall be rounded to
the nearest multiple of $100,000.
``(4) Tokenized digital asset.--The term `tokenized digital
asset' means any digital asset (other than any qualified U.S.
dollar stablecoin) if more than an insignificant portion of the
value of such digital asset is related to anything other than
the operation of the cryptographically secured distributed
ledger on which such digital asset is recorded.
``(5) Wrapped digital asset.--The term `wrapped digital
asset' means, except as otherwise provided by the Secretary to
prevent abuse, any digital asset if such asset--
``(A) is redeemable on demand, on a one-for-one
basis, for another digital asset, and
``(B) is recorded on a cryptographically secured
distributed ledger other than the cryptographically
secured distributed ledger on which the digital asset
referred to in subparagraph (A) is recorded.
``(6) Reference digital asset.--
``(A) In general.--The term `reference digital
asset' means, with respect to any wrapped digital
asset, the digital asset referred to in paragraph
(5)(A).
``(B) Special rule for rewrappings.--If, but for
this clause, the reference digital asset with respect
to any wrapped digital asset would be a wrapped digital
asset (hereafter referred to in this paragraph as the
lower-tier wrapped digital asset)--
``(i) subparagraph (A) shall be applied
with respect to such lower-tier wrapped digital
asset, and
``(ii) the reference digital asset with
respect to such lower-tier wrapped digital
asset shall be treated as the reference digital
asset of such wrapped digital asset.
``(C) Multiple wrappings.-- If, after the
application of subparagraph (B), the reference digital
asset with respect to the lower-tier wrapped digital
asset is a wrapped digital asset, such subparagraph
shall be reapplied by treating such lower-tier wrapped
digital asset as the wrapped digital asset.
``(7) Stablecoin.--
``(A) Qualified u.s. dollar stablecoin.--The term
`qualified U.S. dollar stablecoin' means any U.S.
dollar stablecoin which is issued by--
``(i) a permitted payment stablecoin issuer
(as defined in section 2(23) of the GENIUS Act,
as in effect on the date of the enactment of
this paragraph), or
``(ii) a foreign payment stablecoin issuer
(as defined in section 2(12) of the GENIUS Act,
as so in effect) which is permitted under such
Act (as so in effect) to offer, sell, or
otherwise make available such U.S. dollar
stablecoin in the United States.
``(B) U.S. dollar stablecoin.--The term `U.S.
dollar stablecoin' means a payment stablecoin as
defined in section 2(22) of the GENIUS Act (as in
effect on the date of the enactment of this paragraph)
applied by substituting `dollars' for `monetary value'
each place it appears in such section.
``(C) Publication of list.--The Secretary shall, to
the extent feasible, regularly publish a list of
qualified U.S. dollar stablecoins.
``(D) Limited authority to treat stablecoins as
money.--The Secretary may issue such regulations or
other guidance as may be necessary or appropriate to
(except as otherwise expressly provided in this
title)--
``(i) treat qualified U.S. dollar
stablecoins as dollars, and
``(ii) treat other stablecoins as currency
if such treatment would increase Federal
revenues.''.
SEC. 6. RULES OF CONSTRUCTION.
(a) No Inference With Respect to Application of Other Provisions of
Law.--Except as otherwise expressly provided by this Act (or an
amendment made by this Act) with respect to the application of one or
more provisions of the Internal Revenue Code of 1986, nothing in this
Act (or any amendment made by this Act) shall be construed to create an
inference that a digital asset does or does not constitute a security,
a commodity, debt, equity, stock, a partnership interest, or an
interest in a trust, for purposes of any provision of law.
(b) No Inference With Respect to Prior Periods.--No provision of
this Act (or any amendment made by this Act) shall be construed to
create any inference with respect to the proper application of any
provision of the Internal Revenue Code of 1986 with respect to any
period before the period to which such provision or amendment applies.
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