Non-profit research and advocacy Coin Center has taken a proactive stance by urging Congress members to establish clear and comprehensive regulations for cryptocurrencies, particularly in the realm of taxation.Â
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Coin Center Addresses Congress Members
In a recent letter addressed to Senate Finance Committee Chairman Ron Wyden and Finance Committee Ranking Member Mike Crapo, Coin Center outlined essential principles that should guide blockchain regulation to ensure a fair and efficient taxation framework.
In its mission to advocate for a balanced and well-informed regulatory environment, Coin Center underscores the importance of governments providing explicit and detailed information about how cryptocurrency transactions will be taxed.Â
Given the unique and novel nature of cryptocurrencies as assets, clarity in taxation policies is crucial to avoid confusion and ensure fairness. The Coin Center recommends that a clear threshold should be established, below which no tax is applicable.Â
This threshold, known as a de minimis exemption, is crucial for facilitating microtransactions and daily usage of cryptocurrencies in payments, especially in contexts where transactions involve very small amounts.
Coin Center Addresses Taxation of Mining and Staking Rewards
Additionally, Coin Center’s second principle addresses the taxation of rewards derived from mining or staking on blockchain networks.Â
Drawing an analogy to agricultural produce or livestock, the organization argues that these rewards should not be immediately taxed as income when they are created. Instead, it proposes that taxation should occur when these rewards are sold by the miner or stakers.
This approach aligns with traditional tax practices related to agriculture and livestock. Just as a farmer is taxed upon the sale of crops or livestock rather than their mere growth, Coin Center suggests that governments should levy taxes on mining and staking rewards when they are realized through a sale.
Japan Advocates for Crypto Tax System Overhaul
It is worth noting that Coin Center’s call comes shortly after the Japan Blockchain Association (JBA) raised its voice to advocate for a much-needed revision of the country’s crypto taxation framework.Â
The association contends that the existing system impedes the advancement of Web 3.0 enterprises within Japan, creating complexities and uncertainties that hinder the industry’s development.
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