Crypto policy experts at Coin Center have made a formal plea to key members of the Senate Finance Committee; namely Chairman Ron Wyden and Finance Committee Ranking Member Mike Crapo. The advocacy group wishes for a better-framed tax policy concerning digital assets.
While governments are expected to lay down exhaustive instructions for taxing cryptocurrency transactions, there is some ambiguity given the innovation of cryptocurrencies as assets. To aid governments in their decision making, Coin Center has turned to a few foundational principles.
The organization backs the idea of a nominal exemption for minor crypto transactions. The implementation of this exemption is touted to lessen unwanted complexity and foster the daily use of cryptocurrency, much like the exemptions awarded to minor foreign currency conversions.
The group also eases the stand on taxing block rewards proceeding from mining or staking, calling for these rewards to go untaxed until they are sold. The crypto market perhaps finds sympathy in this suggestion, which likens block rewards to a non-taxable natural yield an individual might gain from their land or livestock.
The urge for exemption extends to cryptocurrency obtained through unexpected airdrops or as a hard fork from a user’s existing assets, as Coin Center argues they warrant taxation only upon selling or other forms of disposal.
This innovative spirit is slightly dampened when the discussion shifts to intermediaries in digital asset transactions. The advocacy group takes issue with the extension of tax reporting legislation to third-party non-custodials such as miners, stakers, and wallet software developers.
Notably, concerns about this matter came to the forefront in September 2021 when Congress approved Biden’s Infrastructure bill. This particular legislation widened the tax code’s definition of “broker”, potentially encompassing the aforementioned groups.
Coin Center has rounded off its arguments by encouraging simpler methods of determining cryptocurrency donation amounts. Their preference is to use widely accessible exchange data rather than undergo a burdensome appraisal procedure.
Prominent Senators Bernie Sanders and Elizabeth Warren have called for distinct tax reporting norms for digital asset brokers in harmony with the Infrastructure bill. Also, a 2022 analysis from Barclays indicated that the crypto industry might be paying less than half of the due taxes. A clear demonstration that notwithstanding the push and pull of determination, the blend of tech and finance requires regulation clarity.
Source: Cryptonews
