US proposes tax exemption for crypto transactions under 50 USD

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2022-07-30 01:48:40

In order to encourage the use of cryptocurrencies as a medium of exchange in the US economy, a bipartisan group of US congressmen has introduced a bill that would exempt taxes for transactions of valuable cryptocurrencies. small.

US congressman wants to exempt transactions under 50 USD from tax

US congressman wants to exempt transactions under 50 USD from tax

Yesterday (July 26), in the US Senate, two senators Patrick Toomey (R-Pa.) and Kyrsten Sinema (D-Ariz.) jointly proposed a bipartisan bill, entitled: “Cryptocurrency Tax Fairness Act”. Accordingly, it is proposed to eliminate tax obligations for crypto transactions under $50 or capital gains of $50 or less.

If this measure is passed, it would change the tax laws of US Internal Revenue Service (IRS), tax-free for cryptocurrency transactions whose value does not exceed 50 USD. At the same time, crypto users in the US will not have to provide transaction reporting information below 50 USD.

Lawmakers consider that, if so, US citizens will have more incentive to use cryptocurrencies in daily payment transactions.

While, the IRS currently wants to keep the rule that taxes the use of cryptocurrencies in any form as an investment, must pay income tax.

“Despite the potential and opportunity for cryptocurrencies to be applied to the everyday lives of Americans, our current tax regulations are hindering the growth of this industry. Cryptocurrencies need to be treated more fairly by tax free for small personal transactions like buying a cup of coffee.” – Senator Toomey expressed.

Discussion around the bill

Is it possible to use crypto for daily payments?

Reporting on CNBC, Business News reporter Ylan Mui said the tax exemption is related to capital income tax.

“The ultimate goal of the above law is to encourage the public to accept cryptocurrencies.”

Prominent organizations such as the Blockchain Association, Digital Asset Markets Association, and Coin Center also voiced their support for the bill.

Jerry Brito, CEO of Coin Center, commented that the bill will help “small fish” in the market to be able to register, use and micro-transact more conveniently. If approved, he believes that the “decentralized blockchain infrastructure” will be able to develop and improve more quickly, keeping up with the payment needs of users.

Concerns about crypto tax evasion

Along with the benefits for investors and the crypto market, on the other hand, crypto tax evasion is a worrying factor.
Along with the benefits for investors and the crypto market, on the other hand, crypto tax evasion is a worrying factor.

Under a law passed by Congress in November 2021, crypto companies will have to track all user transactions from 2023 and submit that report to the IRS and users next year.

However, before many accounting regulatory frameworks, many organizations and businesses still try to find a way to “evade the law”.

“Crypto tax evasion remains a major problem for Washington policymakers even amid the recent downturn. The Treasury Department and the IRS have struggled to quickly draft rules for collecting and reporting information about customer transactions by crypto institutions.”

Bills that are trying to control US cryptocurrencies

US officials in recent years have repeatedly shown a deep interest in the legal field of cryptocurrencies.

It started with the event that President Biden signed into law a bill that taxed cryptocurrencies and assigned the Treasury Department to define what a “crypto broker” is. This ambiguity was later met with fierce criticism.

Next, the financial authority of the United States is Financial Stability Oversight Committee (FSOC) affirmed that it will proactively limit risks from stablecoins in case the National Assembly hesitates for too long on that issue.

Many US congressmen also “stand still”, compiling proposals to comprehensively regulate cryptocurrencies. Most notable are: “Responsible Financial Advancement Act” penned by senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY), asking for tax breaks for crypto transactions under $200. However, the “probability of winning” of the bill is not high when the audience is too wide.

Bills that are trying to control the cryptocurrency market
Bills that are trying to control the cryptocurrency market

In addition, the Internal Revenue Service wants to be able to tax income from NFT speculation of investors. The US Department of the Treasury recently “revived” a controversial crypto wallet regulation that is said to be able to “strangle” the emerging NFT industry in the country.

The multi-institutional community in the cryptocurrency industry has criticized the plans for their violation of democratic liberties.

Head of Policy at Blockchain Association.

On the other hand, ahead of the November 2022 midterm elections, many candidates for US government positions are using the guise of “adopting cryptocurrency” as a way to attract voters.

As of now, it is unclear how the Cryptocurrency Tax Fairness Act will impact the IRS plans.

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