House Ways and Means Advances Digital Asset Tax Bill: What Firms Need to Know
The House Ways and Means Committee voted 38 to 5 on 17 September 2026 to advance the Digital Asset Tax Certainty Act, the first bipartisan tax framework ever produced for digital assets by a congressional tax-writing committee. For accounting firms, CFOs, and auditors carrying cryptocurrency or stablecoin positions on client or company balance sheets, the bill introduces a set of proposals that would fundamentally reshape both the tax character of digital asset transactions and the accounting methodology used to measure them. The legislation is not yet law, but a 38-5 committee vote signals broad appetite that practitioners cannot ignore.
What the Digital Asset Tax Certainty Act Actually Proposes
The bill was introduced on 15 September 2026 by Ways and Means Chair Representative Jason Smith of Missouri, with bipartisan input from other committee members. Its core aim is to remove the friction that has made ordinary digital asset transactions, including using stablecoins such as USDC as a payment medium, a tax compliance minefield.
Medium-of-Exchange Relief and Parity with Traditional Assets
One of the most consequential provisions for day-to-day operations is a proposal to reduce the tax burden on using digital assets as a medium of exchange. Under current Internal Revenue Service guidance, every disposal of cryptocurrency, including spending a stablecoin to pay an invoice, is a taxable event that must be tracked at the individual transaction level. The bill would create safe-harbour treatment to reduce that friction, though the precise de minimis threshold has not been publicly specified in the available text.
Beyond medium-of-exchange relief, the bill would extend two existing Internal Revenue Code safe harbours to digital assets, placing them on parity with comparable traditional financial instruments. It would also allow charitable donations of many common digital assets to qualify for the same streamlined valuation rules that apply to publicly traded securities, removing the need for a qualified appraisal that currently applies to non-cash property donations above certain thresholds.
Mark-to-Market Accounting for Dealers and Traders
Perhaps the most technically significant accounting provision is the election to use mark-to-market accounting for digital asset dealers and traders, mirroring the treatment available to securities dealers under existing IRC Section 475. Under mark-to-market, open positions are treated as sold at fair value on the last business day of the taxable year, with gains and losses recognised as ordinary income or loss. For firms running active trading desks or treasury functions with significant token inventories, this election could substantially change both the timing and the character of recognised gains and losses.
From a stablecoin accounting perspective, the interaction is nuanced. A stablecoin such as USDC held as a functional cash equivalent is unlikely to produce meaningful mark-to-market adjustments given price stability, but the election's applicability to stablecoin positions held by dealers or institutional market makers needs careful analysis once draft statutory language is available. Firms using crypto accounting software to manage token inventories should flag this provision for immediate technical review.
Anti-Abuse Rules: Wash Sales and Constructive Sales Come to Crypto
The bill would extend the wash-sale rule, currently found in IRC Section 1091, to digital assets. Under the wash-sale rule, a loss on a sale is disallowed if a substantially identical asset is repurchased within 30 days before or after the sale. Crypto has historically been exempt from this rule, a gap that has allowed investors and treasury managers to harvest losses aggressively at year-end before immediately re-entering positions. The bill would close that gap.
Constructive-sale rules, which apply to appreciated financial positions that have been economically hedged, would also extend to digital assets. Rules applicable to financial derivatives, US territories, and foreign corporations would similarly be brought into the digital asset perimeter. For firms with offshore treasury structures holding digital assets, the foreign corporation provisions deserve particular attention.
Voluntary Disclosure Programme
The bill would direct the Treasury Department to establish a voluntary disclosure programme specifically for digital assets, offering reduced penalties and a clean slate for taxpayers who come forward. The stated rationale is to address the accumulated uncertainty, high compliance costs, and redundant reporting obligations that have deterred voluntary compliance. For accounting firms advising clients with unreported or under-reported prior-year digital asset positions, this programme, if enacted, could represent a significant remediation pathway.
What Was Removed: Mining and Staking Deferral
The Banking Industry Pushes Back
An earlier version of the bill included provisions to clarify the tax treatment of crypto mining and staking rewards, covering sourcing, character rules, and a specific carve-out intended to let exchange-traded investment products engage in staking without threatening their tax status.
During the markup session, that language was stripped from the bill following objections from the banking industry. The American Bankers Association publicly welcomed the removal, with its president and CEO stating that taxing similar income consistently, regardless of the underlying asset, is a foundational principle of tax fairness. The withdrawal of the staking provisions means the longstanding uncertainty around whether staking rewards are ordinary income at receipt, analogous to the IRS position implied by existing guidance, or whether deferral is available, remains unresolved in statute.
For auditors and preparers, this matters. Until Congress or Treasury provides clear statutory authority, the conservative and currently defensible position remains that staking rewards are ordinary income at the time of receipt at their fair market value. Firms should not assume that a future bill will replicate the removed deferral provision.
The EFIN Verification Act: A Tax Infrastructure Bill with Compliance Implications
Real-Time EFIN Validation Before E-Filing
The committee also advanced the EFIN Verification Act, introduced on a bipartisan basis by Representatives Ron Estes of Kansas and Jimmy Panetta of California. The bill would require tax software to verify in real time that an Electronic Filing Identification Number is active and authorised before e-file functionality is enabled.
The practical intent is to intercept fraudulent returns before submission. Criminal actors currently exploit stolen or compromised EFINs to file returns under other taxpayers' names and redirect refunds. For accounting firms and tax practices that maintain their own EFIN credentials, this bill would place an affirmative obligation on software providers to implement validation at the point of use. Firms should review their current e-filing workflows and assess whether their existing crypto bookkeeping software or tax preparation systems would need updates to comply if the bill becomes law.
The FULL HOUSE Act: Restoring Gambling Loss Deductibility
Reversing a Senate-Introduced Change
The third bill advanced by the committee is the Facilitating Useful Loss Limitations to Help Our Unique Service Economy Act, or FULL HOUSE Act. It addresses a specific change introduced when the Senate amended the One Big Beautiful Bill Act: that amendment reduced the deductibility of gambling losses against winnings from 100% to 90%.
The FULL HOUSE Act would restore full deductibility up to the amount of winnings, preventing taxpayers from owing tax on gambling activity where they broke even or posted a net loss overall. The committee advanced this bill by the same 38-5 margin. While this provision does not directly affect digital asset accounting, the policy principle it invokes, that taxpayers should not be taxed on income they did not actually retain, echoes the broader debate about realisation-based versus accrual-based taxation of volatile assets. That underlying principle is directly relevant to the mark-to-market and wash-sale provisions in the digital asset bill.
Legislative Outlook: Likely Delayed Until 2027
Congress Recesses Before a Full Floor Vote
Despite the strong committee vote, the practical legislative timeline is constrained. House Speaker Mike Johnson cancelled the chamber's scheduled Thursday session on 17 September 2026 and sent members home, with the House not expected to reconvene until the second week of November following the midterm elections. That compressed calendar makes a full House and Senate vote on any of these bills before the end of the current congressional term highly unlikely.
The context matters further: the Clarity Act, a higher-profile bill that would have divided regulatory oversight of the crypto market between the Securities and Exchange Commission and the Commodity Futures Trading Commission, failed to clear a procedural Senate vote earlier that same week, despite sustained industry lobbying. That failure may effectively end the Clarity Act's prospects in the current Congress. The Ways and Means bills face a parallel dynamic: the committee vote is meaningful, but floor passage before the term closes is uncertain. The more likely scenario is that these proposals are reintroduced in the 120th Congress beginning in January 2027.
For a fuller picture of the legislative context surrounding the September 2026 markup session, see our earlier coverage of the Ways and Means crypto tax markup and what the September 2026 Hill roundup means for firms. For context on the parallel Clarity Act collapse and the stablecoin accounting gap it leaves open, see our analysis of the Clarity Act Senate defeat and the stablecoin accounting gap firms must fill now.
Accounting and Tax Implications for Firms and CFOs
Actions to Take Before the Bill Becomes Law
Committees advancing legislation create legitimate expectation of change, even before enactment. Firms and CFOs should not wait for a presidential signature to begin preparation. The following steps are defensible now under professional standards and position clients well for any eventual transition.
First, document your current digital asset accounting methodology with precision. If the mark-to-market election becomes available, the decision to elect or not elect will require a clear baseline of current cost-basis methodology, lot identification method (FIFO, specific identification, etc.), and the tax character of existing open positions.
Second, model the wash-sale exposure in existing portfolios. Firms that have been managing tax-loss harvesting strategies for clients holding digital assets should run a retrospective analysis of year-end activity to understand what positions would have been disallowed had the wash-sale rule applied. This helps quantify prospective exposure and informs planning for the remainder of the 2026 tax year.
Third, assess the voluntary disclosure opportunity for any clients with unresolved prior-year positions. The proposed programme has not yet specified penalty reduction rates or look-back periods, but identifying candidates now means firms are ready to act quickly once statutory details are available.
Fourth, for clients with foreign corporation structures or US territory operations holding digital assets, flag the anti-abuse provisions for specialist international tax review. The interaction between existing subpart F rules, GILTI, and proposed digital asset anti-abuse provisions will require careful analysis.
Finally, revisit the USDC accounting treatment for any stablecoin positions classified as cash equivalents on the balance sheet. The bill's medium-of-exchange provisions and the broader digital asset accounting software ecosystem will need to reflect any statutory change to how stablecoin disposals are treated. If your firm's current workflow treats every stablecoin transfer as a taxable disposal, the proposed safe harbour could reduce reporting volume significantly — but only once the statutory threshold is confirmed.
FAQ
Frequently Asked Questions
Does the 38-5 committee vote mean the Digital Asset Tax Certainty Act is now law?
No. A committee vote advances a bill to the full House floor for a vote, which has not yet occurred. The bill would then need to pass the Senate and be signed by the President before becoming law. Given the congressional recess through early November 2026, floor passage this term is uncertain.
If the mark-to-market election is enacted, must all digital asset holders use it?
Based on the bill's framing, the election would be available to dealers and traders, not mandatory for all digital asset holders. The specific eligibility criteria and irrevocability rules will depend on final statutory language, which has not yet been released in full.
How does the proposed wash-sale extension affect stablecoin positions?
Stablecoins such as USDC are unlikely to generate material wash-sale disallowances given their price stability, but the rule would technically apply if a stablecoin position is sold at a loss and a substantially identical position is re-entered within the 30-day window. Firms holding stablecoins primarily as functional cash equivalents face minimal practical exposure, but the analysis differs for positions held speculatively or as part of a yield strategy.
What happened to the staking and mining tax provisions?
Those provisions were removed during the markup session following objections from the banking industry. The tax treatment of staking and mining rewards, including whether they constitute ordinary income at receipt, remains governed by existing IRS guidance and is not resolved by the bill as advanced.
Should firms advise clients to participate in the proposed voluntary disclosure programme now?
The programme does not yet exist in statute, so no formal participation is possible. However, firms should identify clients who might benefit and preserve all relevant records now, so they are positioned to act quickly once programme details and any applicable deadlines are published by the Treasury Department.
Source: Accounting Today