Written by: KarenZ, Foresight News
On September 16, just one day after the CLARITY Act failed to pass a procedural vote in the Senate, another U.S. bill related to digital asset taxation made progress.
Unlike the CLARITY Act, which primarily addresses SEC and CFTC jurisdiction and the structure of the digital asset market, H.R. 10357—the Digital Asset Tax Certainty Act—focuses on a more specific issue: how the United States should tax digital assets.
Who introduced the bill, and at what stage is it currently?
H.R. 10357 was introduced on September 14 by Representative Jason Smith, a Republican from Missouri and Chairman of the House Ways and Means Committee. The bill has eight co-sponsors, including Jodey Arrington, Aaron Bean, Mike Carey, Steven Horsford, Mike Kelly, David Kustoff, Max Miller, and Rudy Yakym.
Among them, Republican Congressman Mike Kelly of Pennsylvania serves as chairman of the Tax Subcommittee of the Ways and Means Committee. H.R. 10357 incorporates a provision he previously championed on charitable donations of digital assets, allowing eligible digital asset contributions to benefit from simplified tax treatment similar to that applied to publicly traded securities.
Nevada Democratic Representative Steven Horsford is the sole Democrat among this group of co-sponsors. He did not only join the issue near the time of the vote. In May 2026, Horsford, along with Republican Representative Max Miller and others, introduced H.R. 8899, the "Digital Asset PARITY Act." This legislation already addressed issues such as stablecoins, digital asset lending, wash-sale rules, mark-to-market taxation, mining and staking rewards, charitable donations, and investment trusts—some of whose policy directions later reappeared in H.R. 10357. Of course, H.R. 10357 did not fully adopt all of the PARITY Act's provisions.
Following its introduction, the Digital Asset Tax Certainty Act was referred to the House Ways and Means Committee. On September 16, the committee approved the bill by a vote of 38 in favor and 5 opposed; the next step is for it to be considered by the full House. Even if the House passes it, the legislation must still clear the Senate and be signed into law by the President before it can take effect.
What are the key provisions of the Digital Asset Tax Certainty Act?
H.R. 10357 covers retail users, investors, professional traders, brokers, miners, staking service providers, investment funds, and digital asset donors. Its key provisions can be categorized into the following areas.
Netting and transaction fees not exceeding USD 10 may be recognized without recognizing gains or losses.
The Internal Revenue Service currently treats digital assets as property in principle. Using digital assets to pay for expenses may simultaneously constitute a disposition of the asset, requiring the calculation of its cost basis and resulting gain or loss.
H.R. 10357 would provide that, when digital assets are used to pay blockchain network fees of $10 or less, or eligible brokerage fees, transaction fees, liquidity fees, and similar charges, any gains or losses arising from the digital assets used for such payments would not be treated as taxable income.
However, this does not mean that all crypto payments under $10 are exempt from tax. The $10 threshold applies to network fees and transaction charges, not to the purchase price of goods or services. In principle, it also does not extend to professional traders, brokers, digital‑asset dealers, service providers that process transactions in bulk on behalf of others, or entities that conducted more than 5,000 digital‑asset transfers in the preceding year.
This provision is intended to apply to asset disposals occurring after December 31, 2027.
Provides simplified accounting options for the broad trading of digital assets.
H.R. 10357 allows taxpayers to elect a simplified accounting method for eligible "widely traded digital assets," providing a voluntary, streamlined approach for such assets. This option is not automatically available to all investors and does not simply reduce taxable income; rather, it permits taxpayers to perform annual aggregate accounting by specific asset type, thereby replacing the practice of tracking costs and recognizing gains and losses on a transaction-by-transaction basis for each individual asset. Eligible U.S. dollar‑stablecoins are excluded from this regime.
Once a taxpayer makes a choice, the annual gain or loss for that particular type of digital asset is calculated using a uniform formula. Simply put, the income realized from disposing of the asset during the year is added to the fair market value of the asset held at year-end, and this total is then compared with the cost of acquiring the asset during the year, the asset's value at the end of the previous year, and any other adjustments specified in the legislation. The excess of the former over the latter is treated as the annual gain; otherwise, it is treated as an annual loss. Under this regime, individual sales, exchanges, or other dispositions of that asset type within the same year are, in principle, no longer separately recognized as gains or losses.
This regime can reduce the costs associated with identifying each individual transaction; however, it comes at a price: gains and losses calculated under this method are treated uniformly as short-term capital gains or losses, and once elected, the election is, in principle, irrevocable for the first five tax years. The relevant rules are proposed to apply to tax years beginning on or after December 31, 2027.
Establish dedicated regulations for eligible U.S. dollar‑denominated stablecoins.
H.R. 10357 proposes to determine the tax basis and transaction value of eligible U.S. dollar‑denominated stablecoins based on the issuer's promised redemption value in U.S. dollars.
Under certain statutory conditions, if the purchase, sale, or exchange value of a stablecoin remains close to its redemption value, taxpayers generally are not required to separately recognize gains or losses arising from minor price deviations around the $1 par value. The legislation establishes threshold levels—such as 99.5% and 100.5%—with different thresholds applying to different stages of the transaction.
This treatment does not extend to all dollar‑pegged tokens. Eligible stablecoins must, in principle, be issued by a licensed payment‑type stablecoin issuer as defined under the GENIUS Act, or by a qualified foreign issuer duly registered in the United States pursuant to applicable law. The Treasury Department is also required, to the extent practicable, to publish periodically a list of eligible stablecoins.
Additional restrictions also apply to traders, brokers, certain high-frequency traders, taxpayers using functional currencies other than the U.S. dollar, and related-party transactions. The relevant rules are proposed to take effect for tax years beginning after December 31, 2026.
Some traditional financial and tax regulations have been extended to digital assets.
H.R. 10357 seeks to subject eligible digital assets to certain tax regimes already applied to securities and commodities, primarily including:
Eligible digital asset lending transactions may be subject to the rule of not recognizing gains or losses immediately, provided that the lending agreement meets certain conditions, such as the obligation to return assets of the same kind.
Digital asset traders and eligible professional traders may elect to be taxed on a mark-to-market basis;
Foreign investors engaging in digital asset transactions through U.S. brokers or agents may be eligible for safe harbors analogous to those applicable to securities and commodities trading.
When donating eligible U.S. dollar‑denominated stablecoins or widely traded digital assets, certain qualified valuation requirements may be waived.
For digital assets that neither fall into the two categories mentioned above nor qualify as tokenized digital assets, taxpayers cannot claim a charitable deduction by donating the assets themselves. However, they may first sell or exchange such assets for eligible U.S. dollar‑denominated stablecoins and donate the proceeds within the prescribed time frame; any qualifying gains from such disposals will be excluded from taxable capital gains.
The proposed rule under the bill also clarifies that these tax provisions, by themselves, cannot be used to conclude that a particular digital asset necessarily constitutes a security, a commodity, a debt instrument, or an equity interest under securities law or other applicable laws.
Anti‑avoidance rules such as wash sales and constructive sales have been extended to digital assets.
H.R. 10357, while affording digital assets certain tax treatments traditionally applied to conventional financial instruments, also extends the relevant anti‑avoidance rules to this market. The primary objective of this provision is to close tax loopholes unique to digital assets, preventing investors from artificially creating paper losses through rapid sell‑and‑buy transactions or from locking in gains via derivatives without recognizing taxable events.
First is the Wash Sale rule. The bill proposes to include trading‑type digital assets, except for qualified U.S. dollar‑stablecoins, under IRC Section 1091. If an investor sells a digital asset at a loss and acquires a substantially identical asset within 30 days before or after the sale, the related loss generally cannot be deducted immediately but is instead added to the cost basis of the replacement asset. For example, if an investor sells Bitcoin at a loss and then immediately buys back the same Bitcoin, they will no longer be able to use that loss to offset other capital gains as under the current rules. Contracts and options corresponding to these assets are also covered; tokenized, packaged assets that are economically equivalent to stocks, securities, or other digital assets may likewise be deemed "substantially identical" assets.
The bill also extends the constructive sale rule to digital assets, preventing investors from indefinitely deferring taxes while effectively locking in gains on those assets. For example, even if an investor has not actually sold a digital asset that has appreciated in value, the tax law may treat such arrangements as sales—whereby the investor is required to recognize any realized gains accrued up to that point—if the investor has essentially locked in those gains through short selling, forward contracts, or other offsetting positions.
In addition, the bill revises the tax treatment of digital assets in foreign‑owned corporations, U.S. territories, and hedge‑fund‑style position portfolios.
The nature of mining and staking revenues has been clarified, but the confirmation time remains unresolved.
The bill categorizes income derived from mining, staking, and similar blockchain validation activities under the umbrella of "Income from Digital Asset Validation Support Activities," and explicitly classifies such income as ordinary income.
In principle, the source of income is determined based on the taxpayer's residency status: income attributable to U.S. residents is generally treated as U.S.-source income, while income attributable to nonresidents is generally treated as foreign-source income.
If the verification activity is conducted at a fixed location within or outside the territory, the source shall be determined in accordance with the actual circumstances of that business premises.
With respect to investment trusts, the bill provides that a trust will not automatically lose its trust tax status merely by pledging its digital assets, receiving staking rewards, or taking necessary liquidity‑management measures. However, if the entity actively engages in blockchain‑validation activities, it may not rely on this protection.
Adjusting Broker Reporting Rules
The bill proposes to revise the reporting obligations of digital asset brokers, aligning them with stablecoin regulations and simplified accounting options.
U.S. dollar‑denominated stablecoins that meet the eligibility criteria and are acquired at or near their redemption value may no longer be reported on a trade‑by‑trade basis as ordinary digital assets. If a taxpayer elects to use simplified accounting for a broad category of traded digital assets, the broker may report, on an aggregate basis by asset class, information such as transactions, net gains or losses, and year‑end and year‑beginning fair values.
Establish a Voluntary Disclosure Program for Digital Assets
The bill requires the Treasury Department to establish a voluntary disclosure program for digital assets within 12 months of its enactment. Eligible taxpayers may, within 24 months of the program's launch, file applications and amended returns to pay any outstanding taxes, interest, and the prescribed penalties for digital‑asset violations.
Upon completion of the prescribed remedial measures, taxpayers may qualify for a partial reduction or waiver of civil penalties; and, where applicable, information voluntarily disclosed will not be used to initiate specific criminal investigations or prosecutions with respect to the violations already disclosed.
The bill also directs the Treasury Department to examine the feasibility of leveraging zero-knowledge proofs, smart contracts, and other blockchain technologies to enhance the efficiency of information reporting, withholding tax collection, tax compliance, and data protection.
The bill also includes a provision on gambling losses.
H.R. 10357 ultimately incorporated provisions of the FULL HOUSE Act, which are not directly related to digital assets, proposing to restore the previous rule that allows taxpayers to deduct their full gambling losses against gambling income.
Under the current rules, starting in 2026, deductible gambling losses will be capped at 90% of actual losses and may not exceed gambling income. In theory, a taxpayer who wins $100,000 over the course of a year but also loses $100,000 would have a zero economic outcome yet could still face $10,000 of taxable income because only $90,000 of losses would be deductible. H.R. 10357 seeks to reverse this change.
What does this bill mean?
H.R. 10357 seeks to address the following key questions: Which small‑value transactions need not be tracked on a per‑transaction basis? How should stablecoins be accounted for? Can digital assets be governed by traditional financial regulations? And what anti‑tax‑avoidance and reporting obligations should investors and platforms bear?
From a policy perspective, the value of H.R. 10357 lies not in "reducing taxes on cryptocurrencies," but in its attempt to establish a relatively symmetrical regulatory framework: lowering unnecessary compliance costs, granting digital assets certain tax treatments already enjoyed by traditional financial assets, and simultaneously extending the anti‑avoidance rules applicable to conventional markets.
However, the bill is still quite far from taking effect. It has so far only been approved by the House Ways and Means Committee, and the text could still be amended during further deliberations in either the House or the Senate.