Two U.S. lawmakers have introduced a bill aimed at providing clarity on the taxation of Bitcoin (BTC) and crypto miners’ block rewards. Representatives Drew Ferguson and Wiley Nickel announced on April 30 that they had presented the Providing Tax Clarity for Digital Assets Act to the U.S. House of Representatives. The proposed legislation seeks to categorize staking rewards as created property under the U.S. tax code and collect taxes on block rewards at the point of acquisition.
Representative Ferguson stated, “The United States has always been a leader in innovation and technology, but we are lagging behind other countries in terms of providing tax clarity for the emerging digital asset industry. The current treatment of digital asset rewards in the U.S. is overly complicated, leading to investor confusion, double taxation, and American businesses relocating abroad.”
Crypto advocacy group Coin Center praised the bill for its “sensible policies,” which involve taxing block rewards from proof-of-work and proof-of-stake networks when they are sold or spent, rather than when they are acquired. Sheila Warren, CEO of the Crypto Council for Innovation, referred to the legislation as “right on point” for offering much-needed guidance.
Coin Center argued that block rewards should be classified as value creation resulting from a user’s actions and efforts, rather than income from an employer. They believe that this straightforward policy would resolve major issues with the current taxation of cryptocurrencies and create a fair playing field for the technology.
The bill comes approximately 10 days after the Bitcoin miner rewards were reduced from 6.25 BTC to 3.125 BTC per block following the blockchain’s fourth halving event. Halvings have historically led to a decrease in the new supply of the cryptocurrency and eventually caused its price to surge. As of the time of writing, the price of BTC stood at $58,030, representing an approximately 11% decline since the halving on April 19.
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