No more taxes for small Bitcoin, Ethereum transactions?

Sahana Kiran
Source – Unsplash

When Bitcoin [BTC], the very first cryptocurrency hit the market, it was exempted from taxes and similar government-related norms. However, with the increase in demand, popularity, and value of cryptocurrencies, these assets fell under the purview of the government.

The increased yield that crypto investors were bagging did not settle well with regulators. Therefore, heavy taxes were imposed on the smallest transaction involving crypto. This could be changing as a prominent Republican, part of the Senate Banking Committee is pushing for a tax exemption.

Senator Patrick Toomey decided to support Democrat Krysten Sinema in her initiative to exempt taxes on small crypto transactions. A bill dealing with the same is expected to put forth. Transactions up to $50 and less would be exempted through this bill.

Speaking about the same, Toomey said,

“While digital currencies have the potential to become an ordinary part of Americans’ everyday lives, our current tax code stands in the way.”

The Internal Revenue Service [IRS] classifies Bitcoin and other cryptos as property as opposed to a currency. Therefore, it is taxed based on its current value. The percentage of tax ranges keeping in mind the purchases made and the assets held.

As mentioned above, the imminent bill intends to allow crypto to be used easily as a payment method. Toomey added,

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

Will this crypto tax exemption see the light of the day?

This bill sort of mirrors the extensive bill put forth by senators Cynthia Lummis and Kirsten Gillibrand. While it’s good to see an array of officials come together to make crypto more accessible to the average Joe, they still need a green signal from higher authorities. Toomey revealed that he intends to aid the crypto market before he retires.

With innovation and financial freedom as its primary goal, extreme regulations could certainly hinder the growth of the industry. Indian crypto investors and businesses, for instance, have been suffering due to the 30 percent tax imposed on crypto transactions.

The increase in the demand for crypto and a push from these officials could urge the government to roll out better laws for the industry.