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Scott Melker explains everything you need to know about two crypto-related bills that are set for US House consideration this week.
“The Daily Wolf with Scott Melker” airs every day at 12:00 p.m. Tune in for your daily dose of all things crypto.
If you’ve ever uh owned crypto in the United States or especially used it, you know how difficult it is to understand what you’re doing according to the IRS tax code. So, this is the first one and the most basic problem that this addresses is small transactions. In this case, it would exempt qualifying crypto fees worth $10 or less from capital gains calculations. Now, since Bitcoin and crypto including stable coins
are viewed as property effectively in the United States or an asset. If you buy coffee with Bitcoin for $2, you now have a taxable sale of that Bitcoin. Either you’re up and you need to pay capital gains or you’re down and it’s a right off, but you have to calculate every small transaction you do in crypto as a capital gains as a capital gain or a capital loss and nobody wants to do that, which has prevented people from actually using
crypto for its intended purpose for years. Well, they’re looking to create a de minimis exemption here. So really what this bill is doing is removing some ridiculous tax friction from using crypto.
But it also is going to make crypto investors follow more of the rules that already apply to stocks, most notably the wash trading rule. And if you are not familiar with this, this has been a huge tax loophole advantage for crypto event investors that does not exist anywhere else. If you have a massive loss on crypto because of the way it’s classified, you can sell
that, take the loss and immediately buy back the position at the exact same price. You can’t do that with stocks. The wash rule of stocks, they have to wait 30 days uh so that you can’t take that tax advantage. Crypto’s had that, that would be eliminated. The second action that’s being taken by a House Committee is this. Strategic Bitcoin Reserve bill set for House Committee vote Wednesday. So what this bill would do
is it would require that Bitcoin be held for at least 20 years. If you remember the executive order, the biggest promise was we will not sell what we already have. Right? That’s an executive order and can be easily reserved. uh, reversed. So putting that into law would be huge. So not being able to sell any Bitcoin the government holds for 20 years. It would require agencies to report how much Bitcoin they own, require an independent annual proof of reserves audit,
allow states to store Bitcoin in separate federal accounts while retaining ownership, and it would also continue from the executive order to study budget neutral ways the government could acquire additional Bitcoin because right now, you’re not allowed to print money to buy Bitcoin, you can’t raise taxes to buy Bitcoin. None of those things are here and it specifically would violate another proposal from Senator Lamus, which was to revalue America’s gold reserves
to buy Bitcoin. None of those things will happen. So the government already has Bitcoin here. This bill would create a transparent vault, basically, disclose what’s inside it and generally prevent the government from selling that Bitcoin for 20 years. I think that we can all cheer for that.
Source: finance.yahoo.com