Lummis’ Bitcoin bill can alter the capital gains landscape for Crypto while the Responsible Financial Innovation Act is being drafted let’s read more today in our latest cryptocurrency news today.
Senator Cynthia Lummis has been working on the Responsible Financial Innovation Act since a year ago and it touches upon the taxation and securities rules relating to crypto. Lummis’ Bitcoin bill seeks to overhaul how crypto can be taxed within the US. Lummis’ state policy director Tyler Lindholm explained that the Responsible Financial Innovation Act is still being drafted and will provide clarity for the users and the industry. One of the biggest goals is to provide a guide about capital gains related to mining, staking, and spending:
“What we’re really looking at there is just integrating digital assets into the system of taxation.”
The capital gains represent an increase in value from purchasing an asset to when you can sell it. The capital losses represent a drop in value and the US taxes net gains on assets like crypto. The problem is, however, the taxable events. In the beginning, paying for something in BTC or other coin equates to selling it in the government’s eyes. So if you purchase a BTC when the coin was $20,000, then buying a TEsla with the BTC while it was $35,000 you will be hit with capital gains taxes on the $15,000 difference so the bill will do several things on this count.
The bill will clarify that the capital gains don’t apply to productive activities like mining or staking because you won’t be getting rid of the asset. Mining refers to using computing power to help secure the blockchain and earn crypto as a reward. Lindholm added:
“The current gray area is that you might be accruing a capital gains taxable event under the proof of stake as it stands right now, even if you’re just delegating.”
The bill will allow people to exit retirement schemes as well and reinvest the money into crypto. Finally, the bill also seeks to codify Lummis’ and Wyden’s amendment to the $1 trillion bills signed into law in 2020. according to the industry advocates the provision within the bill that redefined brokers to include crypto actors was overly broad and can require BTC miners and PoS validators to provide the IRS with tax information and other network users. Senator Lummis was quite supportive of BTC and other cryptocurrencies and according to her, she purchased her first BTC back in 2013.