H.R. 9173: Charitable Deductions for Digital Asset Donations Act

This bill, known as the Charitable Deductions for Digital Asset Donations Act, aims to amend the Internal Revenue Code regarding the tax treatment of charitable donations involving digital assets. Here’s what the bill proposes:

1. Charitable Contributions of Digital Assets

The bill allows for an exception from the appraisal requirement that is currently applicable to certain charitable contributions. Specifically, it states that those making charitable contributions of widely traded digital assets will not be required to provide an independent appraisal for the value of these donations.

2. Definitions of Digital Assets

The bill introduces several definitions related to digital assets:

• Digital Asset: A digital representation of value recorded on a cryptographically secured distributed ledger or similar technology.
• Traded Digital Asset: Any digital asset that is fungible and has readily available quotations on an exchange.
• Widely Traded Digital Asset: A traded digital asset that meets specific criteria, including having market quotations available for an entire calendar year and a market capitalization exceeding $500 million at all times during that year.
• Wrapped Digital Asset: A digital asset redeemable on demand for another digital asset, with its own unique ledger.
• Tokenized Digital Asset: Any digital asset, excluding qualified U.S. dollar stablecoins, whose value is linked to factors beyond just the operation of the ledger.

3. Effective Date

The provisions of this bill would take effect for taxable years beginning after December 31, 2026.

4. Rules of Construction

The bill includes provisions clarifying that its enactment should not be interpreted to infer the legal classification of digital assets (such as whether they are securities, commodities, etc.) pertaining to other laws or prior periods.

5. Purpose

The intent of this legislation is to reduce the regulatory burden on individuals and organizations that wish to make charitable contributions in digital assets, thereby encouraging such donations by simplifying the tax process.

Relevant Companies

• COIN (Coinbase Global, Inc.): As a leading cryptocurrency exchange, this bill may impact Coinbase by potentially increasing the volume of donations made in digital assets through their platform.
• EBAY (eBay Inc.): eBay could potentially benefit from increased listings and sales of digital assets, including NFTs, should the bill encourage more charitable contributions involving these assets.
• RIOT (Riot Blockchain, Inc.): As a blockchain company, Riot may see effects from increased demand and legitimacy for digital assets within charitable sectors.