According to The Wall Street Journal, the US Internal Revenue Service (IRS) is expected to update the Bitcoin tax treatment guidelines within a few weeks. At the same time, US lawmakers worry that the United States is lagging behind other countries in the cryptocurrency industry. This concern prompted them to consider passing the bill to clarify the legal issues surrounding cryptocurrencies, thereby promoting the development of the encryption industry.
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Is there an exception to the Bitcoin Tax Guide?
According to the Wall Street Journal, under the pressure of legislators, the US Internal Revenue Service is expected to update the 2014 cryptocurrency guidelines in the coming weeks.
Currently, the IRS refers to bitcoin and other cryptographic assets as “ virtual currencies ” and classifies them as an asset.
According to the US Internal Revenue Service announcement No. 2014-21, Bitcoin is a tradable virtual currency. However, in contrast to the real currency, virtual currency does not have a legal currency status.
This situation is about to change, depending on how the IRS updates its Bitcoin-related guidelines. In a letter addressed to the IRS by Republican Congressman Tom Emmer, he said, "I think this is a very important decision." According to the Wall Street Journal, the US Internal Revenue Service said the update to the guide "will solve the problem of calculating bitcoin tax and other issues."
Some lawmakers are taking action to create a level playing field for Bitcoin
The United States is lagging behind in the global cryptocurrency industry, and the lack of regulatory burden and legal transparency is stifling innovation. As a result, some US lawmakers are beginning to worry and actively promote legislation to stimulate the growth of the encryption industry.
These lawmakers are aware that other countries are already ahead of the US in this industry. For example, Japan and Switzerland have established regulatory frameworks to attract new projects and investments. Therefore, Facebook is more inclined to deploy the Libra project in Switzerland than in the United States.
Bitcoin supporters expect US legislation to avoid categorizing cryptocurrencies as securities to promote the development of Bitcoin-friendly rules.
In fact, in April 2019, the 116th Congress (2019-2020) proposed the 2019 Token Taxification Act, requiring the SEC to amend the Securities Act of 1933 and the Securities Exchange Act of 1934. Encrypted assets are excluded from the definition of securities.
The definition of change is a prerequisite for the introduction of the new standard.
“Adjusting the taxation of virtual currency in an individual retirement account creates a tax-free condition for the exchange of one virtual currency for another, creating a minimum tax standard for the sale or transaction proceeds”.
The US Internal Revenue Service defines the minimum return as follows: “In general, the value of the cryptocurrency and the frequency of transactions need to be taken into account to determine the minimum income limit for tax exemptions and to make them as realistic as possible.”
In addition, Senators Todd Young (R-Ind.) and Ed Markey (D-Mass.), members of the Senate Committee on Commerce, Science and Transportation, proposed the Block Chain Promotion Act of 2019 on February 26, 2019.
One of the purposes of the Blockchain Promotion Act is to waive the use of blockchain for non-financial operations to be classified as currency exchanges.
The Blockchain Promotion Act will also instruct the Secretary of Commerce to set up a working group to study blockchain technology and subsequently define consensus-based blockchain technology definitions. In proposing this bill, Senator Yang said:
“The blockchain has the potential to be a catalyst for sustained economic growth in all US industries. If the United States leads its development, we can ensure that its interests are widely shared. The blockchain not only has the potential to provide financial and economic benefits within the United States, but also in development. The country’s humanitarian and social support will also benefit from the leadership of the United States."
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