A new law could significantly change the way taxes on crypto assets are applied in the US.
This is a bill called the Virtual Currency Tax Fairness Act 2020, proposed by bipartisan members of the US Congress who would like to introduce an exemption on low-value cryptocurrency transactions.
In the US, crypto assets are still regarded as commodities and not as currencies or digital money. This means that each time they are used, a taxable event occurs, even if it is a mere payment, and even if the amount involved is very small.
Consequently, even a hypothetical bitcoin payment for a coffee, for example, would have to be taxed.
The new bill, presented by Suzan DelBene, David Schweikert, Darren Soto and Tom Emmer, proposes to stop treating cryptocurrencies as commodities for tax purposes and to start treating them as foreign currencies, as is already the case in many other countries.
This would mean that transactions with small amounts of up to USD 200 would become free of capital gains. In addition, if approved, the exemption would already be in effect for the fiscal year 2020.
In reality, the possibility of tax exemption for crypto transactions involving small amounts has been discussed for years in the US, but to date, it has been all talk. Whereas this bipartisan bill, if passed, would put an end to this long-standing issue, and since they have reduced the hypothesis of exemption to 200 dollars, compared to the 600 previously suggested, it seems more likely to succeed.
Besides, such an exemption already exists in the US for foreign currencies, so it makes sense to imagine that it could also be applied to cryptocurrencies.
This new law could play a significant role especially in the spread of bitcoin micropayments with Lightning Network, which are currently very difficult to manage at a tax level in the United States.
In fact, it could also quite literally open the doors to those companies, such as Twitter, that want to implement LN payments in their online services.
It may not be that the US Congress as a whole is willing to accept these new regulations, but the fact that the bill is bipartisan shows that there is actually some basic agreement on this initiative.