Bill Backed by US Senators Seeks to Make Small Crypto Payments Tax Free
US Senators Patrick Toomey (R-Pa.) and Kyrsten Sinema (D-Ariz.) have introduced a bill to make crypto transactions of up to $50 tax-free. The bill is aimed at increasing the use of Bitcoin and other cryptocurrencies for making smaller “everyday” payments such as buying coffee or groceries.
A New Crypto-Friendly Bill
Senators Patrick Toomey and Kyrsten Sinema have put forward a new bill that would make smaller crypto payments tax-free in a bid to expand the use of digital assets for everyday purchases. Cryptocurrencies “have the potential to become an ordinary part of Americans’ everyday lives, our current tax code stands in the way,” said Toomey.
The bill, which would make crypto payments of up to $50 and trades in which investors make a profit of less than $50 tax-free, marks a move similar to the Virtual Currency Tax Fairness Act, which was introduced earlier this year in the House of Representatives. Toomey said the new bill will allow Americans “use cryptocurrencies more easily as an everyday method of payment by exempting from taxes small personal transactions like buying a cup of coffee.”
Toomey, who is due to retire from the Senate at the end of this term, has sought to help increase crypto adoption multiple times in the past.
Last month, senators Cynthia Lummis and Kirsten Gillibrand introduced the Responsible Financial Innovation Act – a bill aimed at increasing consumer protection from digital assets while promoting their innovation. Furthermore, if passed, the bill would also make all almost cryptocurrencies as tax-favorable commodities.
The bill would also ensure that the Commodity Futures Trading Commission (CFTC) takes the lead in regulating crypto assets, which many senators consider commodities rather than securities. The CFTC is viewed as a more crypto-friendly regulator, compared to the U.S. Securities and Exchange Commission (SEC) which thinks that most digital assets operate as securities.
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Crypto Firms Welcome the Newly-Proposed Legislation
The tax requirements have been one of the major obstacles that are impeding the use of cryptocurrencies in the U.S. as an alternative payment method. The Internal Revenue Service’s (IRS) current crypto policy states that traders “must recognize any capital gain or loss on the sale” of crypto assets.
Jerry Brito, executive director of crypto research and advocacy center Coin Center, believes that the new bill would significantly promote the use of digital assets for “retail payments, subscription services, and microtransactions.” Most importantly, the bill would facilitate the development of decentralized blockchain infrastructure in general as the blockchain network heavily relies on small transaction fees.
Earlier this year, Senator Elizabeth Warren introduced a less friendly bill that bans cryptocurrency companies from collaborating with sanctioned entities. The bill, called “The Digital Assets Sanctions Compliance Enhancement Act”, was targeting Kremlin and sanctioned individuals in Russia, but many believe that the legislation would cause significant collateral damage to the entire crypto industry.
Do you think small tax-exempt payments would increase crypto adoption in general? Let us know in the comments.