Toomey and Sinema Introduce Bipartisan Legislation to Simplify Use of Digital Assets for Everyday Purchases
Virtual Currency Tax Fairness Act Creates Tax Exemption for Small Personal Transactions
Washington, D.C. – U.S. Senate Banking Committee Ranking Member Pat Toomey (R-Pa.) and U.S. Senator Kyrsten Sinema (D-Ariz.) today introduced the Virtual Currency Tax Fairness Act to simplify the use of digital assets for everyday purchases. This bipartisan legislation exempts from taxation small personal transactions that use virtual currencies for goods and services.
“While digital currencies have the potential to become an ordinary part of Americans’ everyday lives, our current tax code stands in the way,” said Senator Toomey. “The Virtual Currency Tax Fairness Act will allow Americans to use cryptocurrencies more easily as an everyday method of payment by exempting from taxes small personal transactions like buying a cup of coffee.”
“We’re protecting Arizonans from surprise taxes on everyday digital payments, so as use of digital currencies increases, Arizonans can keep more of their own money in their pockets and continue to thrive,” said Senator Sinema.
Under current law, every time a digital asset is used, a taxable event occurs. For example, if an individual uses digital assets to purchase a cup of coffee, the individual would owe capital gains on the transaction if the digital asset appreciated in value—even if the asset appreciated by only a fraction of a penny. The Virtual Currency Tax Fairness Act would simplify the use of digital assets for everyday transactions by creating a sensible de minimis exemption for gains of less than $50 on personal transactions and for personal transactions under $50.
To protect against bad actors looking to take advantage of this exemption to evade taxes on more substantial transactions, the bill includes an aggregation rule to treat all sales or exchanges that are part of the same transaction as one sale or exchange.
The Virtual Currency Fairness Act has broad support across the cryptocurrency industry.
“Cryptocurrency needs the same exemption for small, personal transactions that we have for foreign currency,” said Jerry Brito, Executive Director of Coin Center. “This would foster use of crypto for retail payments, subscription services, and micro transactions. More importantly, it would foster the development of decentralized blockchain infrastructure generally because networks depend on small transaction fees that today saddle users with compliance friction that no doubt costs the economy more than the tax revenue that’s otherwise generated. We are very grateful to Senators Toomey and Sinema for introducing the Virtual Currency Tax Fairness Act that will continue to solidify America’s leadership in cryptocurrency.”
“The use of virtual currencies for retail payments continues to increase in popularity, making it critical for Americans to understand their tax obligations,” said Kristin Smith, Executive Director of the Blockchain Association. “By providing an exemption for small everyday purchases, the Virtual Currency Tax Fairness Act eases the burden for consumers and allows for greater use of virtual currencies for more people. We're proud to support this bipartisan bill in the Senate.”
“We applaud the bipartisan leadership of Senators Toomey and Sinema. Their legislation is forward-looking and focused on the utility of this new technology,” said Sheila Warren, Chief Executive Officer of the Crypto Council for Innovation. “With 1 in 5 Americans holding or using crypto, greater regulatory clarity will support the industry's next stage of growth. We look forward to helping policymakers on the work ahead.”
“The Virtual Currency Tax Fairness Act is a key step forward in both defining the rules of the road for consumers using digital assets as an everyday purchasing tool and alleviating the tax burdens standing in the way of broader adoption,” said Robert Baldwin, Head of Policy, Association for Digital Asset Markets. “We applaud Senators Toomey and Sinema for putting forth this bipartisan legislation and taking the necessary actions to allow consumers to leverage digital assets for the everyday purchases that fuel their lives.”
“The IRS first addressed the issue of taxation of virtual currency transactions in 2014, declaring that virtual currency should be treated as property for tax purposes,” said Perianne Boring, Founder and CEO, Chamber of Digital Commerce. “That classification was a major setback for adoption because taxpayers were required to track gains and losses in the value of virtual currency each time it was used, hindering retail adoption. The Virtual Currency Tax Fairness Act is a step forward in unlocking undue burdens on retail users. We thank Senators Toomey and Sinema for their leadership and look forward to working with them and cosponsors in the legislative process.”
Toomey and Sinema’s Virtual Currency Tax Fairness Act also has bipartisan support in the House, where Reps. Suzan DelBene (WA-01) and David Schweikert (AZ-06) introduced a previous version of the legislation in February.
To read the full text of the bill, click here.
Next Article Previous Article