Legislation sponsored by a bipartisan pair of U.S. senators, the Responsible Financial Innovation Act (S. 4356), would set new tax rules for cryptocurrencies and shift much of the oversight of them to the Commodity Futures Trading Commission.
The bill submitted in June by Democratic Senator Kirsten Gillibrand of New York and Senator Cynthia Lummis, Republican of Wyoming, would create a workable structure for the taxation of digital assets, the lawmakers said. “As digital assets grow in use and legitimacy, it’s important to make it easier for people to use them in their everyday lives,” Gillibrand said in a statement. See Bipartisan Senate Bill Sets Stage for Crypto Tax Clarity (6/13/2022).
The bill creates a de minimis exemption so that people can make purchases with virtual currency without having to account for and report income. The legislation also clarifies the tax treatment of different actors and actions in the digital asset industry, including that “miners” and other validators aren’t “brokers” for income tax purposes and that their rewards shall not be income until redeemed for cash.
Numerous tax provisions in the measure address:
- Gain or loss from disposition of virtual currency;
- Information reporting requirements imposed on brokers with respect to digital assets;
- Sources of income through digital income;
- Decentralized autonomous organizations;
- Tax treatment of digital asset lending agreements and related matters;
- Implementation of effective IRS guidance;
- Analysis of retirement investing in digital assets;
- Digital asset mining and staking
The bill isn’t expected to be approved during the current session of Congress as midterm elections loom and other legislative matters are prioritized.
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