Yesterday, CNBC reported on a proposed bill that would eliminate taxes on crypto transactions worth less than $50.
. @SenToomey and @SenatorSinema are introducing a bill that would allow consumers to buy items with #Bitcoin without having to pay a capital gains tax to encourage more public adoption of #crypto. @ylanmui reports: pic.twitter.com/JY3AdbcMrD
— Squawk Box (@SquawkCNBC) July 26, 2022
The bill is called the Virtual Currency Tax Fairness Act, and it is proposed by Senators Patrick Toomey, a Republican, and Krysten Sinema, a Democrat.
Summary
Crypto transactions under $50 exempt in the US
According to Senator Toomey, cryptocurrencies have the potential to become part of our daily lives, but the current tax code stands in the way of the actual realization of this scenario. Therefore, together with Senator Sinema, they want to make it easier to use digital currencies as a common payment method by exempting small transactions from taxes.
While #crypto has the potential to become part of our everyday lives, the current tax code stands in the way. @SenatorSinema and I are teaming up to make it easier to use digital currencies as a common method of payment by exempting from taxes small personal transactions. pic.twitter.com/B6K3jT7GBC
— Pat Toomey (US Sen. ret.) (@SenToomey) July 26, 2022
Arizona’s senator explains that she wanted to protect the residents of her state from “surprise” transaction taxes on everyday payments in digital currencies.
We’re protecting Arizonans from surprise taxes on everyday digital payment transactions so Arizonans can keep more of their own money in their pockets and continue to thrive. https://t.co/VycXF872Lq
— Kyrsten Sinema (@SenatorSinema) July 26, 2022
Toomey-Sinema’s Virtual Currency Tax Fairness Act simplifies digital payments for everyday purchases by ensuring that there is no taxation on small payments. The law will make it easier for Americans to use cryptocurrencies as a means of everyday payment.
Indeed, on any capital gains generated by the use of cryptocurrencies as a means of payment, the same taxation should be applied as for the sale of cryptocurrencies in fiat currency, but with this bill, a tax exemption will be provided for transactions worth up to $50, or transactions that generate a capital gain of less than $50.
Senator Cynthia Lummis also participated in the creation of the new bill
The bill was drafted in collaboration with Republican Senator Cynthia Lummis who, along with Democratic Senator Kirsten Gillibrand, proposed the Responsible Financial Innovation Act.
Congress will actually be on vacation during August, and after that there will be campaigning for the Mid Term elections. It is unlikely that it will be able to make a decision on this bill before November, and since Senator Toomey has no plans to run again, he may not be in the House to pursue his bill after the elections.
Another similar proposal was previously made suggesting an exemption on transactions under $200, but it was rejected.
However, the context seems to have changed in recent months, largely due to the work of Senators Lummis and Gillibrand that is providing a clear framework for cryptocurrencies within the US legal system.
