Similar proposals have already been introduced in two other bills still sitting in Congress, but there is no indication that they will be passed anytime soon.
Senators Introduce Bill on Tax-Free Crypto Transactions
A new bill to lower taxes on small crypto payments has entered the U.S. Senate.
Senators Patrick Toomey (R-Pa.) and Kyrsten Sinema (D-Ariz.) announced on Tuesday that they had submitted a bill that would exempt crypto transactions of up to $50 from capital gains taxes. Currently, the Internal Revenue Service sees cryptocurrency assets as property and cryptocurrency transactions as investments rather than payments, which means that Americans must track and pay capital gains taxes every time they exchange or sell cryptocurrency. This has dramatically hindered the potential use of the asset class in mainstream commerce, which has been used as an argument against the cryptocurrency’s utility as money by many critics and regulators.
The bipartisan bill, dubbed the Virtual Currency Tax Fairness Act, seeks to exempt small crypto transactions from capital gains tax requirements. If passed, the bill would apply to transactions worth less than $50, with a provision to adjust this threshold in tandem with inflation. Similar provisions have been introduced to Congress in the past, including a homonymous bipartisan bill raised in February by Representatives Suzan DelBene, David Schweikert, Darren Soto, and Tom Emmer that had set the threshold benchmark at $200. Senators Kirsten Gillibrand and Cynthia Lummis submitted a comprehensive crypto bill in June that, among other things, intended to reduce taxes on all bitcoin transactions worth less than $200.
While crypto lobbying groups and the broader community have widely applauded the efforts to exempt small crypto transactions from capital gains tax requirements, the chances of any proposals becoming law by the end of the year are rather low. The current legislative calendar – filled with non-crypto-related issues – closes before the midterm elections in November. Furthermore, Senator Toomey will not run for re-election, so he will not be around to push the bill to its potential enactment next Congress.
