The CLARITY Act just hit a roadblock, and there's another major move in U.S. crypto tax legislation.

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 mainly addresses SEC and CFTC jurisdiction and digital asset market structure, H.R. 10357, titled the Digital Asset Tax Certainty Act, focuses on a more specific question: How should the U.S. tax digital assets?

Who Proposed the Bill and What Stage Is It At?

H.R. 10357 was introduced on September 14 by Jason Smith, Chairman of the House Ways and Means Committee and Republican Representative from Missouri. The bill has 8 co-sponsors, including Jodey Arrington, Aaron Bean, Mike Carey, Steven Horsford, Mike Kelly, David Kustoff, Max Miller, and Rudy Yakym.

Among them, Mike Kelly, Republican Representative from Pennsylvania, chairs the Tax Subcommittee of the Ways and Means Committee. H.R. 10357 incorporates the digital asset charitable donation provisions he previously promoted, allowing eligible digital asset donations to apply simplified tax procedures similar to those for listed securities.

Steven Horsford, Democratic Representative from Nevada, is the only Democrat among the co-sponsors. He didn't start participating in this issue just before the vote. In May 2026, Horsford and Republican Representative Max Miller, among others, co-introduced H.R. 8899, the Digital Asset PARITY Act. This bill already covered issues such as stablecoins, digital asset lending, wash sale rules, mark-to-market taxation, mining and staking rewards, charitable donations, and investment trusts, with some policy directions later appearing in H.R. 10357. Of course, H.R. 10357 does not fully adopt all the designs of the PARITY Act.

After being introduced, the Digital Asset Tax Certainty Act was referred to the House Ways and Means Committee. On September 16, the committee passed the bill by a vote of 38 to 5, with the next step being a full House vote. Even if it passes the House, it still needs to go through the Senate and be signed by the President to take effect.

What Key Provisions Does the Digital Asset Tax Certainty Act Include?

H.R. 10357 covers ordinary users, investors, professional traders, brokers, miners, staking service providers, investment funds, and digital asset donors. Its main content can be divided into the following aspects.

No Gain or Loss Recognition for Network Fees and Transaction Fees Under $10

The IRS currently treats digital assets as property in principle. Using digital assets to pay fees may constitute an asset disposition, requiring calculation of the asset's cost basis and gain or loss.

H.R. 10357 proposes that when using digital assets to pay blockchain network fees of no more than $10, or eligible brokerage fees, transaction fees, liquidity fees, and similar fees, the gain or loss from the digital assets used to pay the fees may not be included in taxable results.

However, this is not "full tax exemption for crypto payments under $10". The $10 threshold applies to network fees and transaction fees, not the purchase amount of goods or services. Professional traders, brokers, digital asset dealers, service providers that process transactions in bulk on behalf of others, and some entities that transferred digital assets more than 5,000 times in the previous year are, in principle, not eligible for the ordinary user exemption.

This provision is proposed to apply to asset dispositions occurring after December 31, 2027.

Simplified Accounting Option for Widely Traded Digital Assets

H.R. 10357 allows taxpayers to choose a simplified accounting method for eligible "widely traded digital assets", providing a voluntary simplified accounting method for such assets. It does not automatically apply to all investors, nor does it simply reduce taxable income; instead, it allows taxpayers to perform annual aggregate accounting by specific asset type, replacing the practice of tracking costs and recognizing gains/losses for each batch of assets individually. Eligible U.S. dollar stablecoins are not subject to this system.

After a taxpayer makes the choice, the annual gain or loss for the same type of digital asset will be calculated using a unified formula. In simple terms, it sums the income from disposing of the asset during the year and the fair market value of the asset still held at the end of the year, then compares this sum to the cost of assets acquired during the year, the value of assets at the end of the previous year, and other adjustments specified in the bill. The portion where the former exceeds the latter is counted as annual gain; otherwise, it is annual loss. Under this system, individual sales, exchanges, or other dispositions of this type of asset during the year are, in principle, no longer recognized separately for gain or loss.

This system can reduce the work of identifying cost basis for each transaction, but there is a cost: gains and losses calculated under this method are treated uniformly as short-term capital gains and losses, and once the choice takes effect, it cannot be revoked in principle for the first five tax years. The relevant rules are proposed to apply to tax years beginning after December 31, 2027.

Special Rules for Eligible U.S. Dollar Stablecoins

H.R. 10357 proposes to determine the tax basis and transaction value of eligible U.S. dollar stablecoins based on the U.S. dollar redemption value promised by the issuer.

Under statutory conditions, if the purchase, sale, or exchange value of the stablecoin remains near the redemption value, taxpayers generally do not need to recognize gain or loss separately for minimal price differences around $1. The bill sets thresholds such as 99.5% and 100.5%, with different thresholds applying to different transaction links.

This treatment does not cover all U.S. dollar-pegged tokens. Eligible stablecoins must, in principle, be issued by licensed payment stablecoin issuers as specified in the GENIUS Act, or by qualified foreign issuers registered in the U.S. according to law. The Treasury Department also needs to regularly publish a list of eligible stablecoins to the extent feasible.

Dealers, brokers, some high-frequency traders, taxpayers using non-U.S. dollar functional currencies, and related-party transactions are subject to additional restrictions. The relevant rules are proposed to apply to tax years beginning after December 31, 2026.

Extending Some Traditional Financial Tax Rules to Digital Assets

H.R. 10357 intends to apply some tax systems already used for securities and commodities to eligible digital assets, mainly including:

• Eligible digital asset lending can apply rules that do not immediately recognize gain or loss, but the lending agreement must meet conditions such as returning the same type of asset;
• Digital asset dealers and eligible professional traders can choose mark-to-market taxation;
• Foreign investors trading digital assets through U.S. brokers or agents can apply a safe harbor similar to that for securities and commodity transactions;
• When donating eligible U.S. dollar stablecoins or widely traded digital assets, some qualified appraisal requirements can be waived;
• For other digital assets that do not belong to the above two categories and are not tokenized digital assets, taxpayers cannot claim a charitable deduction for directly donating the asset itself; however, they can first sell or exchange the asset into an eligible U.S. dollar stablecoin and donate the proceeds within the specified period, and the eligible disposal gain may not be included in taxable capital gains.

The proposed rules of the bill also clarify that these tax provisions themselves cannot be used to infer that a digital asset is necessarily a security, commodity, debt, or equity under securities law or other laws.

Extending Anti-Avoidance Rules Such as Wash Sales and Constructive Sales to Digital Assets

While granting digital assets some traditional financial tax treatments, H.R. 10357 also extends corresponding anti-avoidance rules to this market. The core purpose of this part is to plug tax loopholes unique to digital assets, preventing investors from creating false losses by quickly selling and repurchasing, or locking in gains through derivatives without recognizing taxable events.

First is the Wash Sale rule. The bill proposes to include tradable digital assets except eligible U.S. dollar stablecoins in 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 date, the related loss cannot be deducted immediately in principle; instead, it is added to the cost basis of the replacement asset. For example, if an investor sells Bitcoin at a loss and immediately repurchases the same Bitcoin, they can no longer use this loss to offset other capital gains immediately as under current rules. Contracts and options corresponding to the asset are also included; tokenized or packaged assets that are economically equivalent to stocks, securities, or other digital assets may also be considered "substantially identical" assets.

The bill also extends the Constructive Sale rule to digital assets, preventing investors from continuing to defer taxes while essentially locking in asset gains. For example, even if an investor does not actually sell an appreciated digital asset, if they basically lock in gains through short selling, forward contracts, or other reverse positions, the tax law can treat this arrangement as a sale and require recognition of the gains formed up to that point.

In addition, the bill adjusts the tax treatment of digital assets in foreign companies, U.S. territories, and hedging position portfolios.

Clarifying the Nature of Mining and Staking Income, but Not Resolving Recognition Timing

The bill unifies the income from mining, staking, and similar blockchain verification activities into "digital asset verification support activity income" and clarifies that it is ordinary income.

The source of income is determined in principle based on the taxpayer's residency status: relevant income of U.S. residents is usually considered U.S.-source income, and relevant income of non-residents is usually considered foreign-source income.

If the verification activity is carried out through a fixed establishment inside or outside the U.S., the source is determined based on the actual situation of that business establishment.

For investment trusts, the bill stipulates that a trust will not automatically lose its trust tax status merely because it stakes the digital assets it holds, receives staking rewards, or takes necessary liquidity management measures. However, if the entity actively operates a blockchain verification business, it cannot rely on this protection.

Adjusting Broker Reporting Rules

The bill proposes to adjust the reporting obligations of digital asset brokers to align with stablecoin rules and simplified accounting options.

Eligible U.S. dollar stablecoins acquired at a value close to the redemption value can no longer be processed in the transaction-by-transaction reporting manner for ordinary digital assets. If a taxpayer chooses to use simplified accounting for a certain type of widely traded digital asset, the broker can report aggregated information such as transactions, net gains/losses, and fair value at the beginning and end of the year by asset type.

Establishing a Digital Asset Voluntary Disclosure Program

The bill requires the Treasury Department to establish a digital asset voluntary disclosure program within 12 months of its effective date. Eligible taxpayers can submit applications and amended returns within 24 months of the program's establishment to pay back taxes, interest, and specified digital asset violation penalties.

After completing the required remedial measures, taxpayers can receive partial civil penalty relief; under eligible conditions, the voluntarily disclosed information will not be used to initiate specific criminal investigations or prosecutions for the disclosed violations.

The bill also requires the Treasury Department to study the feasibility of using zero-knowledge proofs, smart contracts, and other blockchain technologies to improve the efficiency of information reporting, withholding tax, tax compliance, and data protection.

The Bill Also Includes a Gambling Loss Provision

Finally, H.R. 10357 includes the FULL HOUSE Act provision, which is not directly related to digital assets, and proposes to restore the original rule allowing taxpayers to deduct all gambling losses within the scope of gambling income.

The current rule, starting in 2026, limits the deductible amount to 90% of actual gambling losses and cannot exceed gambling income. Theoretically, a taxpayer who wins $100,000 and loses $100,000 in a year may still have $10,000 in taxable income because they can only deduct $90,000 in losses, even though the economic result is zero. H.R. 10357 proposes to reverse this change.

What Does This Bill Mean?

What H.R. 10357 really aims to solve are: Which small fees do not need to be calculated transaction by transaction? How should stablecoins be accounted for? Can digital assets apply traditional financial rules? What anti-avoidance and reporting obligations should investors and platforms bear?

From a policy perspective, the value of H.R. 10357 is not in "letting crypto pay less tax" but in trying to establish a relatively symmetrical system: reducing unnecessary compliance costs, allowing digital assets to obtain some tax treatments already enjoyed by traditional financial assets, while also bringing over the anti-avoidance rules from the traditional market.

However, the bill is still far from taking effect. It has only been passed by the House Ways and Means Committee so far, and the subsequent text may still change during the House or Senate deliberation process.