Senators Introduce Bill to Exempt Small Crypto Transactions from Capital Gains Tax
Commentary by Steven Lofchie
Senator Pat J. Toomey (R-PA) and Senator Kyrsten Sinema (D-AZ) introduced the Virtual Currency Tax Fairness Act, which would exempt small virtual currency transactions from capital gains taxes.
The exemption from tax would apply up to $50 per transaction (or related transactions), adjusted annually for inflation. The exemption is designed to reduce the administrative burden to taxpayers of using virtual currencies in small retail transactions. It would apply only to virtual currencies "used primarily as a medium of exchange, unit of account, store of value, or any combination of such functions," such as Bitcoin or Ethereum.
Senator Toomey asserted that the bill received support across the cryptocurrency industry. "While digital currencies have the potential to become an ordinary part of Americans' everyday lives, our current tax code stands in the way," he said. "The Virtual Currency Tax Fairness Act will allow Americans to use cryptocurrencies more easily as an everyday method of payment by exempting from taxes small personal transactions like buying a cup of coffee."
Commentary
Where there is a degree of bipartisan support for the development of digital asset technology, there is hope for legislation that might establish clear jurisdictional boundaries for regulatory authority over various types of digital assets, (see, e.g., the Lummis-Gillibrand Responsible Financial Innovation Act and this law firm analysis).