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New Token Taxonomy Act Introduces Tax Exemption for Cryptocurrency

The revamped Token Taxonomy Act (TTA) will introduce a de minimis tax immunity for cryptocurrency transactions below $600. The exemption was announced by Jerry Brito, Coin Center’s executive director, during the recent Consensus 2019.

Tax Exemption of $600

The tax exemption specifies that if a digital currency owner sees a capital gain of $600 worth of crypto, they’re not required to disclose the gain to the United States’ Internal Revenue Service (IRS), the country’s tax authority.

Brito states that the situation is similar to how minimal gains on foreign currencies were handled before a de minimis clause was introduced by Congress in the 1990s. Before the clause, if a citizen bought foreign currency to use in another country during a vacation and experienced capital gains while in possession of said currency, they technically have to report it.

Utilization Taxation

However, Brito also pointed out that an individual could technically be required to report capital gains incurred when utilizing cryptocurrency to buy items like plane tickets, laptop, or even when developing a smart contract, as this demands the disbursement of ether (ETH) or similar crypto.

Brito also said that regulatory authorities can also opt to require individuals to report small expenditures.

It was previously reported that the Token Taxonomy Act would exclude cryptocurrency from being designated as security of the legislation was ever passed. The TTA would also be delimiting the jurisdiction the Federal Trade Commission (FTC) and the Commodity Figures Trading Commission (CFTC) had. It would also give regulatory assurance for the compliance and implementation of crypto statutes.

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