Securities Tax
Crypto loans could fall under securities tax rule in Kustoff bill
Representative David Kustoff’s PAR Act would treat traded digital assets like securities for one narrow lending rule. The bill keeps broader crypto questions open, including whether a token is a security or a commodity.
A House bill from Tennessee Republican Representative David Kustoff would make digital-asset loans fit more cleanly inside an existing tax rule for securities lending. It is a narrow change, but it could shape how crypto loans are documented and taxed.
- The PAR Act would rename a securities lending rule so it also covers traded digital assets.
- It would not overhaul crypto taxes or decide whether digital assets are securities.
- The practical effect is on how crypto loans are documented and taxed.
- The bill is from Rep. David Kustoff of Tennessee.
- For crypto lenders and trading platforms, the practical issue is not just price swings
For crypto lenders and trading platforms, the practical issue is not just price swings. It is whether the tax code treats a digital-asset loan the way it treats a securities loan. In Washington, Representative David Kustoff’s PAR Act, short for the Providing Analogous Rules for Digital Assets Act, would make that comparison more literal by folding traded digital assets into section 1058 of the Internal Revenue Code of 1986.
Under current law, section 1058 covers securities lent under an agreement. The bill would replace that word with “specified assets,” and define that category to include both securities and traded digital assets. It would also require the borrower to make equivalent payments for interest, dividends, property, legal entitlements and other distributions during the loan period, while putting traded digital assets under the same lending framework.
A narrower fix than a crypto rewrite
The change is narrow, and that is what makes it important. It does not create a new crypto tax system, and it does not decide whether a digital asset is a security or a commodity for other parts of federal law. Instead, the PAR Act plugs digital assets into an existing rule that already governs how lenders and borrowers handle certain transfers, while also revising how payments and other entitlements are treated as the loan runs.
For ordinary investors and businesses, that is mostly about paperwork and structure. A clearer federal lending rule can make it easier to write lending agreements and line up crypto transactions with the tax treatment already familiar in securities finance.
What counts, and when it applies
The bill also spells out which assets qualify by defining “specified assets” to include securities and traded digital assets. In the broader tax code, that same framework is tied to terms like traded digital assets and widely traded digital assets, which helps set the boundary between routine lending and looser categories of crypto activity.
The proposal would apply to transfers made after enactment, while some trading rules would kick in for taxable years beginning after enactment or after Dec. 31, 2025. That means anyone structuring digital-asset loans around the edge of a tax year would need to pay close attention to the final language.