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Congressional Committee Proposes New Tax Rules for Cryptocurrencies
The House Ways and Means Committee on Friday published draft legislation that would change how taxpayers report gains and losses from digital asset transactions, while also delaying taxation on newly created tokens, Bloomberg News reports.
Under the proposed rules, tokens created through mining or staking would not be treated as income until they are sold. Upon sale, any gain or loss would be treated as ordinary income rather than capital gain.
A separate proposal would allow holders of widely traded digital assets to report their total annual gains and losses without calculating tax on each individual transaction. This rule would not apply to traders, dealers or users who carry out more than 5,000 transactions per year. The legislation also includes separate provisions for stablecoins — tokens pegged to the value of currencies such as the US dollar.
Another proposal would close loopholes that allow cryptocurrencies to avoid tax restrictions applied to securities transactions. The measure would introduce wash sale restrictions for cryptocurrencies, preventing investors from claiming losses on the sale of an asset if they purchase a substantially similar asset within 30 days.
The legislation would also allow cryptocurrency dealers and professional traders to use the mark-to-market tax regime available to securities traders. This voluntary regime provides for taxation of unrealised gains and losses for the year and may be beneficial to traders, as it allows losses to be used to offset tax on other income without the usual capital loss limitations that apply to investors.
