Given:
IPC 607.3
Where a storage water heater is supplied with cold water that passes through a check valve, pressure reducing valve or backflow preventer, a thermal expansion control device shall be connected to the water heater cold water supply pipe at a point that is downstream of all check valves, pressure reducing valves and backflow preventers. Thermal expansion tanks shall be sized in accordance with the tank manufacturer’s instructions and shall be sized such that the pressure in the water distribution system shall not exceed that required by Section 604.8.IPC 604.8
Where water pressure within a building exceeds 80 psi (552 kPa) static, an approved water pressure-reducing valve conforming to ASSE 1003 or CSA B356 with strainer shall be installed to reduce the pressure in the building water distribution piping to not greater than 80 psi (552 kPa) static.Exception: Service lines to sill cocks and outside hydrants, and main supply risers where pressure from the mains is reduced to 80 psi (552 kPa) or less at individual fixtures.
So, if one has a tank water heater, and incoming street pressure is over 80 psi, one would need a Pressure Reducing Valve (or Pressure Regulating Valve) AND some method of controlling thermal expansion, (regardless of the PRV having integral bypass or not - the bypass is irrelevant if the incoming pressure is higher than 80 psi because the water can't go back out until it exceeds the incoming pressure, therefore the bypass can never reduce the pressure inside below exterior pressure levels).
Typically, around here, an expansion tank is utilized for controlling thermal expansion, but other methods could be used, such as installing a Thermal Expansion Relief Valve (TERV).
SharkBite TERV, Sioux Chief TERV, Watts TERV
These valves are advertised as a code-compliant direct replacement for a properly sized expansion tank in a closed-loop system with a tank water heater. The problem is that almost all of the available TERV's don't relieve pressure until the pressure gets up to 125 psi. You can find those that discharge at 80 psi, but it is very difficult. Those linked above are typical examples of what you will find if you start looking.
My opinion is that any TERV that does not discharge at 80 psi does not meet code for controlling thermal expansion. Since the 80 psi models are very rare, if you see such a valve in the field, it's probably a violation. Is this a fair opinion?