On September 30, retiring Senate Finance Committee member Sen. Steve Daines (R-MT) introduced S.5616, the ADAPT (Aligning Digital Assets with Principles of Taxation) Act. The bill sets up a framework for taxing digital assets.

Generally, the bill would:

• Eliminate capital gains/loss tracing and recognition when purchasers use regulated US dollar stablecoins (those that are compliant with the unpassed GENIUS Act) to purchase goods and services
• Make digital assets, excluding qualifying stablecoins, subject to traditional securities anti-abuse rules
• Treat tokenized stocks as “substantially identical” to underlying equities
• Subject digital assets to existing stock, securities and commodities tax rules—including securities-lending treatment, mark-to-market elections for dealers/traders, foreign investor trading safe harbors, and charitable crypto gift rules
• Clarify taxation and income-sourcing for staking and mining rewards
• Provide a non-recognition framework for digital asset lending
• Deal with digital asset investment trusts

The bill is primarily prospective, with an effective date of tax years or transactions beginning after December 31, 2026 for most of its provisions.

The bill is partisan—is has no Democratic cosponsors. Republican cosponsors include Sens. Cynthia Loomis (R-WY), Bernie Moreno (R-OH), and Tim Scott (R-SC).

Prospects: Like the bipartisan crypto tax package approved by the House Ways & Means Committee last month, prospects for this crypto tax bill diminished after the Senate failed to advance the CLARITY Act. The CLARITY Act—which passed the House in July 2025—would create a regulatory structure for cryptocurrency. The ADAPT Act (and its House counterpart) deal only with crypto tax issues. Some lawmakers think the overall regulatory structure should be established before dealing with tax rules.

However, it seems likely that the incoming 120^th Congress will fashion some kind of crypto tax legislation – it is widely viewed as a potential revenue raiser—and next year the hunt for offsetting (or deficit-reducing) revenue will be more intense than ever. But there are still key issues to be resolved, both in the context of tax and with respect to overall regulatory structure. The issue could take a while to mature.

NAIFA Staff Contact: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org