HR-10357-119
Ordered to be Reported in the Nature of a Substitute by the Yeas and Nays: 38 - 5.
Sponsored by Jason Smith (R-MO)
What it does
This bill would create new tax rules for digital assets, including exempting small transaction fees from capital gains tax, allowing simplified "mark-to-market" style accounting elections for widely traded crypto, setting rules for stablecoin basis and gain calculations, extending securities-lending and dealer/trader tax treatments to digital assets, applying wash-sale and constructive-sale anti-abuse rules to crypto, clarifying tax treatment of mining and staking income, and creating new broker reporting requirements and a voluntary disclosure program. It would also direct Treasury to issue extensive implementing regulations and conduct a study on further compliance issues.
Who benefits
Cryptocurrency holders and everyday users who make small purchases or pay network fees, crypto traders and dealers seeking accounting parity with securities/commodities dealers, stablecoin issuers and users, crypto exchanges and brokers, digital asset lending platforms, and taxpayers who donate widely traded digital assets to charity (who would no longer need costly appraisals).
Who is hurt
The federal government faces potential revenue loss from new exclusions and simplified accounting elections; taxpayers who engage in more than 5,000 transactions per year or who are dealers/brokers would face more complex compliance rules; the IRS and Treasury would bear substantial new administrative and regulatory-drafting burdens; taxpayers who fail to properly document stablecoin transactions or wash-sale positions could face new anti-abuse enforcement.
Supporters argue
Supporters argue that current tax law forces crypto users to calculate capital gains on trivial transactions like paying a $2 network fee, creating absurd compliance burdens for ordinary use as a medium of exchange. They contend the bill brings crypto tax treatment into parity with existing rules for stocks and commodities, reducing uncertainty that has driven innovation and trading activity offshore, while closing loopholes by extending wash-sale and constructive-sale rules that already apply to traditional assets.
Opponents argue
Opponents argue the bill's de minimis exemptions and simplified mark-to-market elections could be exploited to defer or avoid recognizing substantial gains, reducing federal tax revenue in ways that have not been fully estimated. They contend the complexity of the new rules — with dozens of new definitions, elections, and exceptions — will primarily benefit sophisticated traders and institutions with tax counsel, while ordinary investors and the IRS itself struggle to keep pace with implementation.
Constitutional context
Congress has broad authority under the Sixteenth Amendment and the Taxing and Spending Clause (Art. I, §8, cl. 1) to define how income and gains are calculated and recognized, and this bill operates squarely within that settled authority by adjusting timing and characterization rules rather than creating new taxes. No landmark case directly governs these accounting-method definitions, though Moore v. United States (2024) remains relevant background on how far Congress can go in taxing unrealized gains.
Checks and balances
Congress would set the statutory tax rules while delegating substantial regulatory discretion to the Treasury Department to define terms, prevent abuse, and issue transition guidance, with courts available to review agency rules under ordinary administrative law standards.
Historical precedent
Congress has previously codified similar mark-to-market elections and dealer/trader tax rules for securities and commodities under Section 475, which this bill extends by analogy to digital assets.