US Lawmakers Introduce Bill to Clarify Taxation Procedure for Crypto Miners
Summary:
U.S. Representatives Drew Ferguson and Wiley Nickel have put forward the Providing Tax Clarity for Digital Assets Act to provide clear taxation rules for Bitcoin and cryptocurrency miners over block rewards. The bill defines block rewards as 'created property' for tax purposes, to be taxed at acquisition rather than sale. The move has been praised by cryptocurrency advocacy groups. The proposal comes about 10 days after Bitcoin's fourth halving event.
A proposed bill has been presented by two U.S. legislators with the aim of shedding light on the method of taxation for Bitcoin and cryptocurrency miners for their block rewards. This proposal, dubbed the Providing Tax Clarity for Digital Assets Act, has been forwarded to the U.S. House of Representatives by Representatives Drew Ferguson and Wiley Nickel, as of April 30. According to the bill's details, block rewards are to be classified as created property in accordance with U.S. tax laws, and their taxes should be gathered at the point of acquisition.
Rep. Ferguson noted that despite the U.S. leading in the spheres of technology and innovation, its approach towards taxation of digital asset rewards is characterized by complexity. This, in his view, led to double taxation, investor confusion, and the relocation of American businesses abroad.
Praising the proposed bill, Coin Center, a cryptocurrency advocacy group, lauded its "sensible policies". They specifically pointed out its approach of taxing block rewards derived from proof-of-work and proof-of-stake networks at the point of their sale or expenditure, rather than at acquisition. Sheila Warren, the Crypto Council for Innovation's CEO, also praised the bill, stating that it is accurately aimed towards providing essential guidance.
Coin Center argued that the classification of block rewards should be seen as value creation due to a miner's activities, not as salary received from an employer. By adopting this policy, they believe, the major issues linked with cryptocurrency taxation can be solved, and blockchain technology could be placed on a more equitable footing.
This legislative move comes nearly ten days after Bitcoin miner rewards were halved, moving from 6.25 BTC to 3.125 BTC per block. Such halvings have previously resulted in a decrease in new Bitcoin supply and a subsequent price surge. At the current moment, Bitcoin's price stands at $58,030, representing an approximately 11% drop since the halving on April 19.
Published At
5/1/2024 11:00:00 PM
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