I 
113TH CONGRESS 
2D SESSION 
H. R. 5777 
To protect cryptocurrencies. 
IN THE HOUSE OF REPRESENTATIVES 
DECEMBER 1, 2014 
Mr. STOCKMAN introduced the following bill; which was referred to the Com-
mittee on Financial Services, and in addition to the Committee on Ways 
and Means, for a period to be subsequently determined by the Speaker, 
in each case for consideration of such provisions as fall within the juris-
diction of the committee concerned 
A BILL 
To protect cryptocurrencies. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This title may be cited as the ‘‘Cryptocurrency Pro-
tocol 
Protection 
and 
Moratorium 
Act’’ 
(also, 
‘‘CryptPMA’’). 
SEC. 2. MORATORIUM. 
(a) Neither the Federal Government nor any State 
or political subdivision thereof shall impose any statutory 
restrictions or regulations specifically identifying and gov-
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erning the creation, use, exploitation, possession or trans-
fer of any algorithmic protocols governing the operation 
of any virtual, non-physical, algorithm or computer source 
code-based medium for exchange (collectively, ‘‘crypto-
currency’’ as defined herein) for a period beginning June 
1, 2015, and extending five years after the enactment of 
this Act (such period, the ‘‘moratorium period’’), except 
for statutes already enacted and effective prior to the date 
of enactment of this Act, and further suspending the en-
actment and effectiveness of any and all pending statutes 
and regulations until the end of the aforementioned mora-
torium period, except as otherwise provided in this section. 
(b) Nothing in this Act shall prevent, impair or im-
pede the operation of any government agency, authority 
or instrumentality, whether of the Federal Government or 
of any State or political subdivision thereof, to enforce cur-
rently existing criminal, civil or taxation statutes and reg-
ulations. 
SEC. 3. DEFINITIONS. 
(a) ‘‘Algorithm’’ is defined as a procedure for solving 
a mathematical problem in a finite number of steps per-
formed by a computer. 
(b) ‘‘Algorithmic chain’’ is a series or chain of bits 
of data comprising a unique string of data which is the 
basis for the cryptographic proof of a valid transfer or 
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transaction of cryptocurrencies. The algorithmic chain for 
a cryptocurrency is commonly referred to as a 
‘‘blockchain’’. 
(c) The ‘‘cryptographic proof’’ for each transaction 
or transfer is based on one unique algorithmic chain, dis-
tinct from all previously existing algorithms and neither 
replicable nor reusable yet sharing with all other units at 
least one common source code element in the algorithmic 
chain (or ‘‘blockchain’’) in the transferor’s existing bitcoin 
or bitcoins. 
(d) ‘‘Protocol’’ refers to procedures or guidelines gov-
erning the creation, development and operation of a 
cryptocurrency. 
(e) ‘‘Service’’ is defined as the Internal Revenue Serv-
ice. 
(f) The phrase ‘‘using the Internet or other elec-
tronic, non-physical medium’’ means by placement of ma-
terial in a computer server-based file archive so that it 
is publicly accessible, on, through, or over the Internet, 
using hypertext transfer protocol, file transfer protocol, or 
other similar protocols. 
(g) ‘‘Cryptocurrency’’ is a popular term encom-
passing code-based protocols supporting an electronic, 
non-physical media for the exchange of value, and for the 
sake of both clarity and the avoidance of confusion in the 
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mind of the public, based on the prior use of this term 
by the Internal Revenue Service in its initial guidance (see 
Notice 2014–21, released March 26, 2014) this term is 
used herein. However, it is believed ‘‘cryptocurrency’’ en-
compasses the same protocols as those covered by terms 
such as ‘‘digital currency’’, ‘‘virtual currency’’ or ‘‘elec-
tronic currency’’. 
SEC. 4. DECLARATION OF MORATORIUM. 
(a) IN GENERAL.—It is the sense of Congress that 
no new statutes, regulations or advisory opinions be 
passed, implemented, enforced or issued governing the cre-
ation, use, possession or taxation of cryptocurrencies, the 
protocols governing each and the data, codes, algorithms 
or other calculations comprising each, until the expiration 
of the moratorium as provided in this Act. 
(b) PUBLIC INTEREST.—It is further the sense of 
Congress that the development and use of any media for 
exchange which possesses the characteristic of cryp-
tographic proof of and for a transaction of cryptocurrency 
without the need for or reliance upon third-party inter-
mediaries or verification is a circumstance that is likely 
to result in economic and other efficiencies for the Amer-
ican people and other participants in the domestic econ-
omy, and as such may be crucial to overall economic 
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growth, will enhance the economic well-being of the Amer-
ican people and will otherwise be in the public interest. 
SEC. 5. DECLARATION OF NEUTRAL TAX TREATMENT. 
(a) IN GENERAL.—It is the sense of Congress that 
the production, possession or use of cryptocurrency, 
whether in trade, commerce or personal non-commercial 
transfers, should not be disfavored or discouraged by the 
Federal tax code or other Federal or State statute or regu-
lation. 
(b) TAX TREATMENT.—It is the sense of Congress 
that the current guidance just promulgated and released 
by the Service in its Notice 2014–21 is advisory, subject 
to public comment and not in final form pending the expi-
ration of the comment period. As such, Congress believes 
that the current guidance is less than optimal for the 
American people and economy, and directs the Service to 
issue or revise interim regulations consistent with the fol-
lowing. 
(c) TREATMENT AS CURRENCY.—It is the sense of 
Congress that virtual currencies should be treated as cur-
rency instead of property in order to foster an equitable 
tax treatment and prevent a tax treatment that would dis-
courage the use of any cryptocurrency. Tax treatment of 
cryptocurrency as property does not account for the sub-
stantial illiquidity and highly limited acceptance and use 
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of cryptocurrency, and substantially and unfairly discour-
ages taxpayers engaging in a trade or business from using 
cryptocurrency in commerce. This circumstance is likely 
to discourage economic activity and stifle innovation and 
growth. At present, a taxpayer accepting cryptocurrency 
for goods or services will be taxed on the fair market value 
of the cryptocurrency despite the fact that exchange rates 
(from cryptocurrency to conventional currency) are both 
highly volatile and published or available only on a small 
number of proto-exchanges in the early stages of develop-
ment, acceptance and awareness by cryptocurrency users. 
As a result, current tax treatment will measure income 
on the basis of an illiquid and likely inaccurate fair market 
value that exceeds the taxpayer’s true fair market value 
and hence income, resulting in the risk of a consistent 
overtaxation or overpayment that will act as a strong de-
terrent to or penalty for accepting cryptocurrency in pay-
ment. Such tax treatment is inconsistent with the tax 
treatment of secured notes for payment in trade or com-
merce, which recognizes a discount from the face value 
of the note due to the illiquid nature of the payment. 
(Note: See IRS Pub. 525 at 4.) 
(d) REVENUE IN TRADE OR BUSINESS; TAXATION 
UPON MONETIZING EVENT.—It is the sense of Congress 
that taxpayers accepting cryptocurrency in trade or com-
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merce should be deemed to realize actual income only 
when cryptocurrency is monetized through conversion or 
exchange into dollars or any official government currency, 
and that fair market value should be calculated as net pro-
ceeds from the conversion. (Note: This treatment seeks to 
achieve the most accurate and fair measure of actual in-
come received, as distinguished from theoretical income in 
the form of cryptocurrency which, until its conversion to 
dollars, remains under substantial risk of diminution from 
illiquidity or other conversion risks or inefficiencies. This 
treatment is consistent with tax treatment of statutory 
stock options where the taxable event is not the receipt 
or exercise of the option, but the sale of the underlying 
stock for proceeds in cash. The goal here is to have income 
taxed when the income is actual instead of theoretical and 
subject to substantial if not total risk of loss through li-
quidity problems, exchange problems or other barriers to 
monetization.) Accordingly, as it is the further sense of 
Congress that income on cryptocurrency received in trade 
or business should be defined as the net proceeds from 
conversion of the received cryptocurrency into dollars, the 
Service is hereby directed to revise or issue interim regula-
tions consistent herewith. 
(e) REVENUE FROM MINING
OR CREATION
OF 
CRYPTOCURRENCY.—It is the sense of Congress that the 
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Service’s guidance that taxpayers should have the fair 
market value of the cryptocurrency they successfully 
‘‘mine’’ or produce included in gross income is inequitable, 
overstates actual income by overstating fair market value 
by not accounting for the liquidity risk or the risk that 
substantial effort may yield no production, and strongly 
and unfairly penalizes or discourages such income pro-
ducing efforts and deters economic growth, activity and 
innovation. Accordingly, as it is the further sense of Con-
gress that mined produced cryptocurrency should be taxed 
as income only when actual income is realized by a trans-
fer and conversion of proceeds into dollars, the Service is 
hereby directed to revise or issue interim regulations con-
sistent herewith. 
SEC. 6. SEVERABILITY. 
If any provision of this title, or any amendment made 
by this title, or the application of that provision to any 
person or circumstance, is held by a court of competent 
jurisdiction to violate any provision of the Constitution of 
the United States, then the other provisions of that title, 
and the application of that provision to other persons and 
circumstances, shall not be affected. 
Æ 
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