The IRS issued a few weeks ago that it would discuss cryptocurrency taxing during the next summit in early March 2020. According to the source, the federal agency may request crypto users to list all blockchain addresses they control, as well as records of all transactions related to these accounts.
However, the investors and the digital currencies’ owners worry about what taxing would mean for the crypto industry. Such concern was one of the main topics at the United States congressional meeting on March 4, 2020. However, the meeting was mainly about blockchain technology and the benefits it could bring for small businesses.
After the U.S. Representative Steve Chabot questioned if blockchain is ready for mass adoption or not. One of the testifying witnesses called out current crypto taxation expectations for their overbearing complexity. Marvin Ammori, Protocol Labs General Council member, stated that doing your taxes for crypto is the worst nightmare.
How would the crypto taxes work?
According to Ammori, the tax treatment is very complicated. For example, if you wanted to buy a coffee with Bitcoin in the morning, you’d have to keep track of what you paid for the Bitcoin. Then, how much it costs at the moment you spent it. And finally, pay the capital gain or loss on every single transaction. All of these would complicate crypto’s use for everyday payments tremendously.
Ammori noted that while blockchain is ready for mass adoption, there is also the need for a few technical changes. These changes include enhanced user interfacing. Council member offered the solution, as a form of exemption. He thinks that if there could be a de minimis tax exemption, which has been proposed, all involved parties should support it.
Furthermore, Ammori petitioned for additional clarity surrounding guidelines from the SEC and CFTC, the Commodity Futures Trading Commission. Jim Harper from the American Enterprise Institute also requested clarity from government agencies for taxes and overall regulation in the crypto and blockchain space.