Coin Center Advocates for Clear and Reasonable Tax Policies for Digital Assets
Crypto policy think tank Coin Center has sent a formal letter to Senate Finance Committee Chairman Ron Wyden and Finance Committee Ranking Member Mike Crapo, advocating for clear and reasonable tax policies for digital assets. In their letter, the senators emphasized the need for governments to provide clear and detailed guidelines on how cryptocurrency transactions will be taxed. Coin Center listed several fundamental principles that should be considered when determining how to tax crypto, including the creation of a de minimis exemption for small cryptocurrency transactions.
Key Points:
- Coin Center recommends the implementation of a de minimis exemption for small cryptocurrency transactions to encourage their everyday use as a medium of exchange.
- Block rewards from mining or staking should not be taxed as income upon creation but only when they are sold.
- Crypto gained through unanticipated airdrops or hard forks should be exempt from immediate taxation and taxed only when sold or disposed of by the taxpayer.
- Non-custodial third parties like miners, stakers, and wallet software developers should not be subjected to the same tax reporting requirements as actual “brokers.”
- Coin Center advocates for simplified valuation methods for cryptocurrency donations, allowing taxpayers to use readily available exchange data to determine fair market value.
Coin Center’s letter also addressed the issue of extending tax reporting rules to certain digital asset intermediaries. The group argued that non-custodial third parties should not be treated as “brokers” and subjected to the same reporting requirements. Coin Center concluded by advocating for simplified valuation methods for cryptocurrency donations to avoid costly appraisal processes. Senators Bernie Sanders and Elizabeth Warren have also called for clear tax reporting standards for digital asset brokers.
Hot Take:
Coin Center’s letter highlights the importance of clear and reasonable tax policies for digital assets. By advocating for exemptions, simplified valuations, and differentiated treatment of intermediaries, Coin Center seeks to promote the use and adoption of cryptocurrencies as a medium of exchange. It is crucial for governments to provide clarity in taxing crypto transactions to foster innovation and growth in the crypto industry while ensuring compliance with tax obligations.
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