The proposed US bill would not allow for the taxation of rewards when purchased.
Two US lawmakers have introduced a bill to clarify how Bitcoin (BTC) and crypto miners are penalized for block rewards.
In an April 30 announcement, Reps. Drew Ferguson and Willie Nickell said they introduced the Digital Assets Tax Transparency Act to the US House of Representatives. The proposed legislation states that the sale of prizes is considered to be generated under the US tax code and that taxes on block prizes are collected upon purchase.
“The United States has long been a leader in innovation and technology, but lags behind our foreign partners in providing tax transparency to the emerging digital asset industry,” said Representative Ferguson. It has caused businesses to move abroad.”
Crypto advocacy group CoinCenter explained the bill by factoring in rewards from proof-of-work and cryptocurrencies when they are sold or withdrawn, rather than when they are held. Sheila Warren, CEO of the Crypto Council for Innovation, called the law “at the right point” to provide the necessary guidance.
“[B]Lock-in rewards are classified as value creation as a result of user activity and effort rather than employer revenue. “This simple policy solves major issues with how cryptocurrencies are shaped today and puts the technology on a level playing field.”
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The law comes about 10 days after Bitcoin mining rewards dropped from 6.25 BTC to 3.125 BTC following the blockchain's fourth stripping event. Halves have historically reduced the supply of new cryptocurrency and ultimately caused the price to rise. At the time of publication, the price of BTC was $58,030, down nearly 11% since the April 19 halving.
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