Small transactions tax-free! US lawmakers push for reform of cryptocurrency tax laws.

Cryptocurrencies have yet to make significant headway in payments, and unreasonable tax policies make it even more challenging for their adoption. Therefore, the non-profit organization Coin Center has teamed up with US lawmakers to introduce the "Cryptocurrency Tax Fairness Act," which, if passed, would exempt small cryptocurrency transactions from taxes, making it possible for cryptocurrency assets to be used for payments.

Unclear Tax Policies

The tax policies regarding cryptocurrency assets in the United States remain ambiguous. The Commodity Futures Trading Commission (CFTC) considers them as commodities, while the Internal Revenue Service (IRS) views them as property. Therefore, using cryptocurrency for transactions almost certainly incurs taxation.

In light of this, Washington-based Coin Center is working towards developing more practical tax regulations for cryptocurrency assets. This non-profit organization has collaborated with Congresswoman Suzan DelBene to introduce a bill that, if passed, would allow for tax exemptions on small transactions.

"Cryptocurrency Tax Fairness Act"

In 2014, the IRS issued guidance regarding cryptocurrency, stating that Bitcoin and other crypto assets should be treated as property, requiring capital gains tax to be paid on the price difference during transactions.

Under these regulations, due to the volatile nature of cryptocurrency prices, even buying a cup of coffee in the future could potentially incur capital gains tax.

The 2020 "Cryptocurrency Tax Fairness Act" aims to address this issue. Representatives from both sides have submitted this legislation to the U.S. Congress, with the goal of making small cryptocurrency transactions easier to conduct. According to the bill:

Income from gains in cryptocurrency transactions due to exchange rate fluctuations should not be included in an individual's total income. This provision does not apply to transactions exceeding $200.

The bill was introduced by Congresswoman Suzan DelBene and other lawmakers, with the hope of treating cryptocurrency in a manner similar to foreign currencies in the future.

According to reports, the Washington-based cryptocurrency research group Coin Center has been working for years to provide viable solutions to obstacles in cryptocurrency adoption. Researchers state:

This is a clear issue in current U.S. cryptocurrency tax regulations, and implementing this simple solution will help ensure fair competition in the cryptocurrency space.

Further Reading

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