Key Takeaways
- In a letter, Coin Center outlined a set of key suggestions that could significantly shape the regulatory landscape for crypto within the US.
- Coin Center advocated for refining the definition of a broker provided by the IRS
Coin Center, a leading cryptocurrency advocacy group, has proposed a series of recommendations to American lawmakers, aiming to influence potential legislation concerning the taxation of digital assets. In an official letter dated August 21, addressed to Senators Ron Wyden and Mike Crapo, Coin Center outlined a set of key suggestions that could significantly shape the regulatory landscape for cryptocurrencies within the United States.
A central focus of the recommendations is the endorsement of the Virtual Currency Tax Fairness Act, a bill that has been introduced in previous sessions of Congress. One of the main provisions of this Act involves the establishment of a de minimis exemption for cryptocurrency transactions. This exemption would treat digital asset transactions similarly to transactions involving the purchase of foreign currencies. The intended outcome of this proposal is to encourage the use of cryptocurrencies as a legitimate form of payment, potentially fostering their wider adoption.
Coin Center also called for a reconsideration of the application of U.S. tax reporting requirements to second parties involved in digital asset transactions. The organization argued that compelling individuals to provide incomplete or non-existent sender information for cryptocurrency transactions could give rise to privacy concerns and undue burdens on taxpayers. Coin Center raised constitutional concerns, specifically pointing to potential infringements of the Fourth and First Amendments.
In addition, Coin Center advocated for refining the definition of a broker provided by the Internal Revenue Service (IRS). The organization’s recommendation is to explicitly exclude specific participants in the cryptocurrency ecosystem, such as crypto miners and operators of Lightning nodes. The objective is to prevent these individuals from being subject to excessive taxes and regulatory obligations related to the technical aspects of blockchain networks.
The importance of clear guidance from the IRS regarding the taxation of various aspects of the cryptocurrency landscape was emphasized by Coin Center. This includes areas like block rewards, airdrops, and hard forks. Additionally, the organization proposed reevaluating the requirement for a qualified appraiser in cases of certain cryptocurrency donations.
These recommendations were submitted in response to a request from the U.S. Senate Financial Services Committee, which had sought input on cryptocurrency tax guidance. Stakeholders were invited to share their responses until September 8.
