DelBene, Schweikert Introduce Bipartisan Legislation to Expand Use of Virtual Currency
Today, Representatives Suzan DelBene (WA-01) and David Schweikert (AZ-06) introduced the Virtual Currency Tax Fairness Act, a bipartisan bill that would create a workable structure for taxing purchases made with virtual currency, also known as cryptocurrency, further strengthening the legitimacy of virtual currency in our digital economy. The legislation is cosponsored by Representatives Darren Soto (FL-09) and Tom Emmer (MN-06).
Currently, any gains from virtual currency must be reported as taxable income regardless of the size or purpose of the transaction. This includes purchases as small as buying a cup of coffee. Individuals are required to calculate and report any changes in the currency’s value against the U.S. Dollar from the time they purchased the currency until it is used in the transaction. This makes the everyday use of virtual currency near impossible, discouraging people from using it and inhibiting the growth of our digital economy.
The Virtual Currency Tax Fairness Act would exempt personal transactions made with virtual currency when the gains are $200 or less.
“Antiquated regulations around virtual currency do not take into account its potential for use in our daily lives, instead treating it more like a stock or ETF,” said DelBene. “However, virtual currency has evolved rapidly in the past few years with more opportunities to use it in our everyday lives. The U.S. must stay on top of these changes and ensure that our tax code evolves with our use of virtual currency. This commonsense bill cuts the red tape and opens the door to further innovations, ultimately growing our digital economy.”
“Virtual currency is reshaping our everyday lives, and the United States needs to recognize this and work to treat these currencies fairly in our tax code,” said Schweikert. “This legislation is an important step forward, and it lays the groundwork for growing the digital economy.”
“While Bitcoin and other cryptocurrencies are technologically innovative payment methods, today you have to keep track of and report every transaction you make using them, whether it’s a $10,000 investment trade or whether you’re buying a 99¢ song online or a latte at a café. This obviously creates friction and puts cryptocurrencies at a disadvantage relative to other digital payment methods,” said Jerry Brito, Executive Director of cryptocurrency think tank Coin Center. “We applaud Representatives DelBene, Schweikert, Soto, and Emmer for their leadership in introducing the Virtual Currency Tax Fairness Act, which would treat cryptocurrencies similarly to how foreign currency is now treated and relieve users from having to keep track of small personal transactions. Not only will this create a level playing field for digital currencies, it will also help unleash innovation on applications like micropayments, which can consist of dozens of transactions per minute and thus are difficult to square with the current law.”
“As the use of virtual currencies for retail payments increases, it’s important that Americans are able to easily understand their tax obligations. By providing an exemption for small everyday purchases, the Virtual Currency Tax Fairness Act would ease this burden for consumers. We’re proud to support the bill's reintroduction in the 117th Congress,” said Kristin Smith, Executive Director of the Blockchain Association.
The text of the bill can be found here.