US Senators Lummis and Gillibrand Propose New Crypto Bill Limiting Capital Gains Tax

Senators Cynthia Lummis and Kirsten Gillibrand have proposed a comprehensive bill amending the crypto capital gain tax reporting.

Bishal Kumar Chanda3 min read
US Senators Lummis and Gillibrand Propose New Crypto Bill Limiting Capital Gains Tax

Senators Cynthia Lummis and Kirsten Gillibrand have proposed a comprehensive bill amending the crypto capital gain tax reporting. President Biden signed off an executive order for multiple federal agencies to create a cryptocurrency policy framework.

Cryptocurrencies as Commodities and Securities

According to Senator Lummis, most cryptocurrencies are commodities, which should place them under the Commodity Futures Trading Commission's regulation. Earlier in an interview with Politico, Lummis further elaborated that she regards Bitcoin and Ether as commodities. Meanwhile, some other cryptocurrencies would need to go through the Howey Test. It is a case law test determining if it's a security, which would fall under the SEC.

 Cynthia Lummis tweets about new crypto bill

The legislation also protects crypto exchange customers from losing funds due to security breaches. Also, it is in line with SEC's newly adopted accounting processes designed to protect customer assets in exchanges. Lummis said, "We're trying to create that opportunity to continue to innovate while having the playing field more clearly delineated."

SEC Chair Gensler warned that the SEC could enforce actions against a firm if it does not comply. Furthermore, he cited how the SEC charged $100 million from BlockFi for failing to register its crypto lending product.

The Senators proposed $600 for the limit for no tax reporting obligation. In an interview with Yahoo Finance, Lummis said, "We came up with a number of $600 just start out with, but among the things that we're doing is sharing our bill draft with a number of our constituents so we can get feedback."

However, this ceiling is subject to change depending on inflation and other factors. Furthermore, the proposed bill aims to make life easier for young US citizens holding some cryptocurrencies.

According to Gillibrand, blockchain technologies have created a platform for multiple uses. For instance, community organization, investing in art and giving value to digital assets using NFTs. She stated that the technology needs to be usable for its purpose.

Moreover, crypto tax exemption is one of the many pieces of Lummis and Gillibrand's crypto regulation bill. The bipartisan duo has also created a standard set of definitions of how to regulate cryptocurrencies.

Stablecoins Should Not be Regulated Like Banks

For stablecoins, digital currencies pegged to some fiat money, the new bill places it under the Office of the Comptroller of the Currency. However, the bill does not encourage the idea of regulating stablecoins as if they are banks.

The Senators didn't want the same regulations for banks to stablecoins, which would limit the market. Rather, they want to offer flexibility to enable innovation. While the new approach does not require any deposit insurance, the stablecoins need to maintain fully-backed reserves of 100% at all times.

Earn more with Bitcompare

The best deals, tools, reviews and tips in your inbox once a week.

No spam, unsubscribe anytime. Read our Privacy Policy.