WASHINGTON (TNS) — Sens. Pat Toomey and Kyrsten Sinema together have introduced legislation that they say would simplify small personal purchases, like a cup of coffee, for users of cryptocurrency.
The Pennsylvania Republican and Arizona Democrat introduced earlier this week the Virtual Currency Fairness Act, a bill that aims to lift taxation requirements on digital asset transactions under $50.
The senators say the current tax rules hamper the use of cryptocurrency for everyday goods and services because each purchase made with a digital asset is a “taxable event” and capital gains will be owed on the transaction if the value of the currency rises.
Virtual currencies, like the popular Bitcoin, Etherreum and Ripple, or other digital tokens, have value that only exists in electronic form, and transactions can only occur online.
”While digital currencies have the potential to become an ordinary part of Americans’ everyday lives, our current tax code stands in the way,” Toomey said. “The Virtual Currency Tax Fairness Act will allow Americans to use cryptocurrencies more easily as an everyday method of payment by exempting from taxes small personal transactions like buying a cup of coffee.”
Sinema said in a statement that she wants to protect her constituents “from surprise taxes on everyday digital payments.”
The bill includes a provision to aggregate multiple transactions that are part of the same purchase into one exchange as a way to combat tax evaders looking to take advantage by dividing a substantial purchases into smaller chunks.
The legislation is receiving praise from cryptocurrency interest groups.
”The use of virtual currencies for retail payments continues to increase in popularity, making it critical for Americans to understand their tax obligations,” Kristin Smith, executive director of the Blockchain Association, said in a statement. “By providing an exemption for small everyday purchases, the [bill] eases the burden for consumers and allows for greater use of virtual currencies for more people.”
Toomey, the Senate Banking Committee’s ranking member, has long supported the “tremendous potential benefits” of virtual currencies and has been at odds with regulators on crypto rules that he fears could chill the market. The senator talked last summer about his purchase of Bitcoin and Etherreum.
In a letter to U.S. Securities and Exchange Commission Chair Gary Gensler, Toomey expressed concern about the agency’s “uncompromising refusal to give regulatory clarity to the cryptocurrency community and consumers.”
Citing a federal insider trading case and the recent collapse of crypto lenders, the senator criticized the agency for choosing to “regulate by enforcement” before delineating which digital tokens should be treated as securities.
Virtual currencies have plunged in recent months. At the time when companies were spending to advertise during the Super Bowl and sponsor sports teams combined assets were valued at $3 trillion. In late June they were worth less than a third of that, according to reporting by the Associated Press.
Several have called for stricter regulations and better protections for crypto investors, even some likening it to the risks that abounded leading up to the 2008 financial collapse.
Toomey and Sinema’s legislation has been referred to the Senate Finance Committee. A bipartisan companion bill was introduced in the U.S. House in February.
