One other thing I want to talk about is the bill introduced in the US Congress. The “Token Taxonomy Act” seeks to exclude “digital tokens” from being defined as securities, amending both the Securities Act of 1933 and the Securities Exchange Act of 1934.
The bill will:
“… direct the Securities and Exchange Commission to enact certain regulatory changes regarding digital units secured through public key cryptography, to adjust taxation of virtual currencies held in individual retirement accounts, to create a tax exemption for exchanges of one virtual currency for an-other, to create a de minimis exemption from taxation for gains realized from the sale or exchange of virtual currency for other than cash, and for other purposes.”
A “digital token,” according to the text:
“…has a transaction history that…is recorded in a distributed, digital ledger or digital data structure in which consensus is achieved through a mathematically verifiable process; and…after consensus is reached, cannot be materially altered by a single person or group of persons under common control;…is capable of being traded or transferred between persons without an intermediate custodian…”
Ok, so what does this all mean? Is this good?
In a word, yes. Very much so.
With this bill, we’d see pro-crypto business protections.
We’d see the decriminalization of ICOs, as they’d no longer violate the Howey Test by having an investment in a common enterprise with the expectation of profit derived by the efforts of others.
Additionally, crypto transactions won’t be taxed so long as they are under a certain threshold. This means that you won’t have to pay tax for buying coffee with BTC, as you currently are.
You’ll still be taxed once you turn your crypto back into fiat, but we’ll no longer have to deal with the headache of trying to determine taxes from the insanity of crypto to crypto trades.
In a sense, if this bill is passed in its current form, it will be great for taxpayers, it would be great for the market, and it would be huge for the crypto space overall.
This is game changing in a massive way. Of course, there is much more that needs to happen if this is to become law, but the possibility is tantalizing.
Overall, the appearance of the most crypto-friendly legislation ever is certainly something to celebrate. Let’s hope this kicks off the sort of discussion needed from legislators surrounding crypto. The US desperately needs to catch up with the rest of the world regarding crypto regulation or else innovation will leave its shores.
Still, a positive sign to end the year on.