A new bill that would exempt small crypto transactions from capital gains taxes has entered the Senate.
According to an announcement shared with The Block, Senators Pat Toomey and Kyrsten Sinema have introduced the Virtual Currency Tax Fairness Act, which establishes a de minimis exemption from reporting taxes on purchases made in crypto.
Currently, crypto users in the US are legally required to report gains made on the value of crypto that they spend — which presupposes that crypto is primarily an investment rather than a means of payment. The IRS has not seemed interested in pursuing these small transactions, but crypto users have long asked for legal protection along the lines of what already exists for foreign currency usage within the US.
The bill would apply to transactions valued at less than $50, with a provision to adjust that benchmark alongside inflation. It also avoids applying to trades between crypto and a fiat currency, as well as "all sales or exchanges which are part of the same transaction (or a series of related transactions) shall be treated as one sale or exchange."
Several influential members of the crypto lobby have endorsed the bill, including Coin Center, the Blockchain Association and the Association for Digital Asset Markets.
A similar bill that sets the de minimis at $200 has been in the House for the past two Congressional sessions. A de minimis exemption for crypto transactions is also a component of the omnibus crypto bill that Senators Lummis and Gillibrand introduced in June, which was the first time such language had appeared in Senate legislation.
The legislative calendar, however, will close before the November midterms. Toomey is also not running for re-election, meaning that he will not be around to pick this bill up next Congress.
© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.