PAR Act
Sponsored By: Representative Kustoff, David [R-TN-8]
Introduced
Summary
Would integrate traded digital assets into the federal tax code. The bill would define traded and widely traded digital assets, extend securities-lending rules to asset loans, and create an elective mark-to-market tax regime for dealers and traders.
Show full summary
- Dealers and traders: Would let dealers elect mark-to-market treatment for covered digital assets and would extend MTM-style rules to traders. Accounting changes could be spread over a 4-year period for method shifts.
- Lenders and borrowers in crypto lending: Would classify certain transfers during lending as “specified assets,” treating the transferor as if it holds and transfers the full economic entitlement and as assuming owner obligations during the loan.
- Active traders and brokers: Would add a digital asset trading safe harbor to miscellaneous income rules so trading through brokers or agents and trading for one’s own account can get MTM-like treatment, with an exception for dealers.
- Market structure and regulators: Would set definitions and price-discovery safeguards including a "$500 million" market-cap test, a "10%" ownership cap, inflation adjustments after 2027, and Secretary authority to update criteria.
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Bill Overview
Analyzed Economic Effects
5 provisions identified: 2 benefits, 0 costs, 3 mixed.
Trading safe harbor for investors
If enacted, the bill would add a safe harbor that treats trading in "traded digital assets" as covered when done through a resident broker, commission agent, custodian, or other independent agent. It would also treat trading for your own account as covered even if an employee or agent has discretionary authority. The safe harbor would not apply to dealers in digital assets. The rule would apply to taxable years beginning after December 31, 2025.
No inference on asset classification
If enacted, the bill would say that nothing in the Act should be used to prove a digital asset is or is not a security, commodity, debt, equity, partnership interest, or trust interest. It would also say the Act should not be used to change tax treatment for periods before the provisions apply. This is meant to limit inferences when other laws are applied.
Mark-to-market option for dealers
If enacted, dealers in covered digital assets and traders in such assets could elect a mark-to-market tax regime under section 475. The election would apply for the year made and later years unless Treasury allows a revocation. Taxpayers who change accounting methods would spread the net section 481 adjustment evenly over four taxable years, and some identifications of covered positions are timely if made within 30 days of the first day of the first taxable year after enactment. The rule would apply to taxable years beginning after the date of enactment.
Clear definitions for digital assets
If enacted, the bill would add new tax-code definitions for digital asset terms like "digital asset," "traded digital asset," and "widely traded digital asset." An asset would be "widely traded" only if it had exchange quotations all year, a market cap above $500,000,000 for most of that year, and no more than 10% owned by you or related persons. The $500,000,000 test would be adjusted for inflation after 2027. The Secretary could publish a list of qualified U.S. dollar stablecoins and exclude assets with unreliable price discovery.
Lending rules for traded digital assets
If enacted, transfers of traded digital assets in lending arrangements would be treated like loans of securities for tax purposes. The borrower or transferee would generally have to pay the transferor amounts equal to interest, dividends, property, and other distributions the owner would have received while the assets were on loan. The transferor would also have to assume the owner obligations for the assets during the loan. These rules would apply to transfers made after the date of enactment.
Sponsors & CoSponsors
Sponsor
Kustoff, David [R-TN-8]
TN • R
Cosponsors
There are no cosponsors for this bill.
Roll Call Votes
No roll call votes available for this bill.
View on Congress.gov