Cryptocurrency Bill Proposed by U.S. Senators Doesn’t Give a Fuck About Domestic Mining Rigs

U.S. Senators Lummis and Gillbrand introduced a potential bill for regulating the growing cryptocurrency industry: the Bipartisan Responsible Financial Innovation Act.

The bill focus on (opens in new tab) “Flexibility, innovation, transparency and consumer protection to integrate digital assets into existing law and provide security to the growing sector.” The purpose of the bill, then, appears to be to simultaneously reign in the decentralized industry, while creating greater consumer protection and safeguarding the innovation of the digital asset market.

It addresses both stablecoin regulation and the tax treatment of digital assets, among other things. The bill not only suggests definitions for concepts related to cryptocurrencies – i.e. digital assets, payment stablecoins, etc.

Basically, your goal is not suffocate the evolution of the cryptocurrency market, but you can be sure that the US government will get its fair share of taxes.

That said, there is a proposal for a “De Minimis Exclusion of up to $200 per transaction” when digital currency is used to pay for goods and services, “under specified conditions”. Literally translated from the Latin version of ‘De minimis’, it means “the law does not care about trifles (opens in new tab),” which is my new favorite way of saying “I’ll leave it to you”.

What all this means is that if you’re just mining or trading a pittance of digital currencies, the US government won’t give a damn.

Of course, it’s the bigger fish the law is interested in. The draft makes a point of mentioning the specification that Decentralized Autonomous Organizations (DAOs), large companies that trade cryptocurrencies will need to be legally viewed as business entities “for the purposes of the tax code.”

So there’s no way to avoid taxes just because your stocks are just meme coins.

There is also a focus on defining cryptocurrencies as ‘ancillary assets’ or ‘commodities’. In other words, they will be seen more as tangible goods like wheat or oil. This means that cryptocurrencies, like NFTs, would be under the governance of the Commodity Futures Trading Commission (CFTC), as opposed to the Securities and Exchange Commission (SEC).

There was some confusion around this before, even a dispute over which department would handle digital assets.

There is also the suggestion, as Blockworks highlights (opens in new tab), that revenue from mining activity and participation would not need to be included as part of gross income tax calculations until the assets were actually sold. Which makes sense if they are being defined as commodities.

What could this mean for the cryptocurrency market, especially at this time of drop in profitability (opens in new tab), it is unclear. we saw a significant sinking in cryptocurrency prices in January 2018 (opens in new tab) due to fear that regulations would come in to stamp out the entire decentralized market.

It is true that everyone seems to be jumping on the cryptocurrency bandwagon. O The UK government even wants to get in on the cryptocurrency action (opens in new tab). As the world is in a current state of crypto-obsession, it makes sense that regulations are followed so that they can be properly aligned with current law.

the account itself (opens in new tab) (PDF notice) is a bit wordy, so if this is a little too cool for you to understand, it might be worth taking a look at section by section overview (opens in new tab) (PDF notice) if you want to get a better idea of ​​how this might affect any assets you are currently HODLing.

Leave a Comment