US Senators Push Bill to Make Small Crypto Transactions Tax-Free

The top Republican on the Senate Banking Committee joined Democrat Kyrsten Sinema in legislation to exempt transactions of less than $50.

AccessTimeIconJul 26, 2022 at 9:00 a.m. UTC
Updated May 11, 2023 at 5:11 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Prominent U.S. senators are trying to free Americans from tracking taxes every time cryptocurrencies change hands, introducing a bill that would exempt them from reporting any transactions up to $50 or any trade in which they earn less than $50.

Sen. Patrick Toomey (R-Pa.) joined with Kyrsten Sinema (D-Ariz.) to push the exemption from tax requirements for crypto users making small investments or purchases. Their Virtual Currency Tax Fairness Act matches a similar effort previously introduced in the House of Representatives. The idea of clearing low-level transactions from tax worries has also appeared elsewhere, including in a more comprehensive bill introduced this year by senators Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.)

“While digital currencies have the potential to become an ordinary part of Americans’ everyday lives, our current tax code stands in the way,” said Toomey. He has sought to help the crypto industry on multiple tracks before he retires from the Senate at the end of this session.

The latest bill will let people “use cryptocurrencies more easily as an everyday method of payment by exempting from taxes small personal transactions like buying a cup of coffee.”

The Internal Revenue Service has held a firm crypto policy: “When you sell virtual currency, you must recognize any capital gain or loss on the sale,” the IRS declares on its website.

That standard has been among the roadblocks standing in the way of crypto’s use in the U.S. as an alternative way to pay for things, industry advocates have argued.

“This would foster use of crypto for retail payments, subscription services, and micro transactions,” said Jerry Brito, executive director of Coin Center, a crypto policy think tank in Washington. “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.”

However, the new legislation faces an uphill climb in a Congress on the verge of a lengthy August recess before the midterm elections. Though there has been some movement on an effort to regulate stablecoins, most congressional insiders predict that crypto is unlikely to see significant progress on legislation until next year.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Jesse Hamilton

Jesse Hamilton is CoinDesk's deputy managing editor for global policy and regulation. He doesn't hold any crypto.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.