Congress is considering an implementation of the Token Taxonomy Act, although a new amendment could exclude capital gains reports up to a certain value. Speaking on the amendment at the 2019 Consensus Conference on May 13, Jerry Brito, Executive Director of blockchain firm Coin Center revealed that they were looking to create a de minimis exemption for transactions worth less than $600 under the token taxonomy act.
Essentially, this introduction will mean that asset holders won’t be obligated to report any capital gains in cryptocurrency, as long as they’re under $600 in value.
Shedding further light on the issue, Brito explained that the situation mirrored the method for reporting small gains on foreign currencies prior to the introduction of the de minimum provision by the United States Congress in the 1990s.
He also stated that crypto asset holders could technically be obligated to report the gains received from purchasing products such as plane tickets and computers with digital assets. With this, regulatory authorities had the legal prerogative to request that these small expenditures be reported.
For better reference, the Token Taxonomy Act was initially introduced to Congress in December 2018 by Reps. Darren Soto (D-FL) and Warren Davidson (R-OH), and it sought to amend the Securities Act of 1933 and the Securities Act of 1934 by excluding cryptocurrencies from being classified as securities.
The bill reads:
“To amend the Securities Act of 1933 and the Securities Exchange Act of 1934 to exclude digital tokens from the definition of a security, to direct the Securities and Exchange Commission to enact certain regulatory changes regarding digital units secured through public key cryptography, to adjust taxation of virtual currencies held in individual retirement accounts…”
The Act followed a Congressional “crypto roundtable,” chaired by Rep. Davidson in September 2018. At the roundtable, representatives from various crypto and Wall Street firms expressed to lawmakers that there was a significant lack of regulatory clarity for digital currencies like bitcoin and the operation of Initial Coin Offerings (ICOs).
It was reintroduced by members of Congress on April 9, and according to a press release shared with news medium Cointelegraph, the latest version of the bill would differ slightly from the original iteration. For instance, the later version classified the jurisdictions of regulators such as the Federal Trade Commission (FTC) and the Commodities Futures Trading Commission (CFTC).
The Act also sought the introduction of regulatory certainty for blockchain-based companies within the United States, as well as clarity to some state initiatives and regulations (such as New York State’s Virtual Currency License)