TL;DR
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Six separate tax bills introduced, targeting crypto inconveniences and imparities to fiat — from coffee purchases to staking rewards
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Staking and mining rewards would be taxed at sale instead of at receipt; wash sale rules would extend to crypto
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White House backing and industry support boost the bills' chances, but they need some bipartisan support to pass
Ahead of this year's midterm elections, the Republicans and the White House are pushing hard to get crypto bills through. Yesterday, they introduced six separate tax bills, specifically aimed at crypto inconveniences and imparities to fiat that crypto owners experience day to day.
All six bills were introduced simultaneously and the next step is a committee markup, which has yet to be scheduled. Within hours, the White House crypto adviser, Patrick Witt, had backed the bill.
What the Six Bills Would Change
31 percent of crypto owners would like to buy a cup of coffee at the local shop, yet each $5 cup of coffee bought with a digital asset generates two new pieces of tax paperwork.
Rep. Jason Smith, chairman of the committee
Right now, if an American crypto owner uses crypto to buy coffee, they create a taxable event and have to fill out two forms. That would be fixed with the bill H.R. 9178.
Additionally, staking and mining rewards would be taxed at sale instead of at receipt, lending crypto would no longer trigger a taxable event, donations in widely used crypto could be made without a paid appraisal and a reduced penalty would be introduced for investors who have failed to report gains. If all of these pass.
On a less positive note, a bill to extend wash sale rules to include crypto was introduced. This means investors can't sell and rebuy crypto investments that are in the red to trigger a taxable event to offset other gains. This used to be a perk with crypto.
Will They Pass?
The immediate backing of the White House is a positive indication for the chances of these bills passing, so is the wide industry support for these changes. However, the bills need some bi-partisan support to pass and several Democratic congressmen want a slower process.
At the same time, Democrats have engaged on the substance of the bills and introduced their own draft. This means there’s good hope for a bi-partisan way forward on the matter.
Digital asset taxation does not have to turn into a partisan fight.
Rep. Jason Smith
This would be the most concrete tax reform with regards to crypto since the 2014 ruling by the IRS, classifying crypto as property which is the reason for today's per-transaction taxation. Keep an eye out for a committee markup date.
