Coin Center shares suggestions on how to approach the tax treatment of digital assets.
Coin Center, a cryptocurrency advocacy group, submitted a letter of suggestions to address the uncertain tax treatment of cryptocurrencies. It serves as feedback to the members of the Senate Finance Committee.
On August 21st, Coin Center published its opinion regarding the intricacies of the Virtual Currency Tax Fairness Act and the taxation of cryptocurrency in particular.
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The letter urges the Internal Revenue Service (IRS) to create a sensible de minimis exemption for smaller cryptocurrency transactions in day-to-day use, e.g., when buying a coffee. Otherwise, the taxation on cryptocurrency would become too convoluted for everyday users.
Currently, cryptocurrencies are treated like property, but Coin Center seeks to have cryptocurrency categorized in a similar fashion as foreign currency, which would mean that low transactions would be exempted from capital gains taxation.
According to the group, this would bridge the gap between crypto and everyday usage since it wouldn’t burden users with constantly tracking and reporting on the changes and fluctuations regarding their cryptocurrency.
Coin Center introduced several principles that would help governments all over the world regarding blockchain regulation and cryptocurrency taxation.
Additionally, the group argues that “cryptocurrency block rewards from mining or staking on cryptocurrency networks should not be taxed as income when they are created”, or it might overtax the users.
The letter presented the idea that second-party reporting shouldn’t be required for crypto users being paid in digital assets.
Recipients of large digital asset payments should be obligated to self-report these assets as income on their annual returns, but they should not be obligated to obtain and regularly report otherwise non-public information from or about the persons who are paying them on penalty of a felony.
While the Virtual Currency Tax Fairness Act was introduced in late 2022, it has yet to become a law, and currently, cryptocurrency is still in the gray regarding taxation and classification.
This is not the first time Coin Center is taking lawmakers head-on, since back in late 2022, the group filed a lawsuit against the over Tornado Cash sanctions.
