Prominent U.S. senators are trying to free Americans from tracking taxes every time cryptocurrencies change hands, introducing a bill that would exempt them from reporting any transactions up to $50 or any trade in which they earn less than $50.
Sen. Patrick Toomey (R-Pa.) joined with Kyrsten Sinema (D-Ariz.) to push the exemption from tax requirements for crypto users making small investments or purchases. Their Virtual Currency Tax Fairness Act matches a similar effort previously introduced in the House of Representatives. The idea of clearing low-level transactions from tax worries has also appeared elsewhere, including in a more comprehensive bill introduced this year by senators Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.)
“While digital currencies have the potential to become an ordinary part of Americans’ everyday lives, our current tax code stands in the way,” said Toomey. He has sought to help the crypto industry on multiple tracks before he retires from the Senate at the end of this session.
The latest bill will let people “use cryptocurrencies more easily as an everyday method of payment by exempting from taxes small personal transactions like buying a cup of coffee.”
The Internal Revenue Service has held a firm crypto policy: “When you sell virtual currency, you must recognize any capital gain or loss on the sale,” the IRS declares on its website.
That standard has been among the roadblocks standing in the way of crypto’s use in the U.S. as an alternative way to pay for things, industry advocates have argued.
“This would foster use of crypto for retail payments, subscription services, and micro transactions,” said Jerry Brito, executive director of Coin Center, a crypto policy think tank in Washington. “More importantly, it would foster the development of decentralized blockchain infrastructure generally because networks depend on small transaction fees that today saddle users with compliance friction.”
However, the new legislation faces an uphill climb in a Congress on the verge of a lengthy August recess before the midterm elections. Though there has been some movement on an effort to regulate stablecoins, most congressional insiders predict that crypto is unlikely to see significant progress on legislation until next year.