The crypto community is encouraged to share their insights until September 8th.
Openly reaching out for insights on digital asset taxation, Senators Ron Wyden and Mike Crapo of the US Senate Financial Services Committee have issued an open letter to the crypto community.
The letter, posted on July 11th, encourages the community to provide their expertise in solving the multifaceted problems surrounding the taxation of this new form of asset.
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It was highlighted by the senators that the Internal Revenue Code of 1986 does not provide a clear-cut category for digital assets. They requested responses to a series of questions divided into nine distinct areas.
In recent months, the Committee on Finance initiated a bipartisan effort to identify key questions that lie at the intersection of digital assets and tax law.
The topics they touched on encompassed a wide range of areas, from fair value (mark-to-market) accounting and digital asset loans to the stimulation of foreign investments through trading safe harbor. Senators delved into more intricate matters such as wash sales, income derived from staking and mining, and the concept of "nonfunctional currency."
Up until now, the IRS's actions regarding cryptocurrency have primarily been targeted at combatting illegal activities. The agency has confiscated an astounding $10 billion worth of crypto in its ongoing law enforcement efforts.
Nevertheless, the IRS has started taking a more hands-on approach toward income taxation of digital assets. A recent instance was when they issued a summons demanding user information on all transactions exceeding $20,000 to Kraken in 2021. On June 30th, the summon received support from the District Court for the Northern District of California.
The Senate committee will continue accepting responses to their open letter until September 8th. It is a strong reminder that digital asset tax policy creation is a collective effort and that lawmakers are keen to involve the community in this process.
