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80,676 viewsJan 20, 2020, 10:37am
Contributor Kyle Torpey
I've been a full-time Bitcoin writer and researcher since early 2014.
The Dome of U.S. Capitol building is seen on Thursday, January 16, 2020.
Last Thursday, the Virtual Currency Tax Fairness Act of 2020 was introduced in Congress. The bill has the potential to solve a major issue with payments made via Bitcoin, Ethereum, and other major cryptocurrency networks in that an exception would be created for the potential capital gains taxes that often occur when these digital assets are used in everyday commerce.
The bill was introduced with bipartisan support from U.S. House Representatives DelBene, Schweikert, Soto, and Emmer. Coin Center, which is a group that advocates for regulatory policy on behalf of the cryptocurrency industry, has been working on this tax-related issue with Bitcoin payments since at least 2017.
Notably, 2019 saw a number of different members of Congress comment on Bitcoin. With Congressman Brad Sherman (D-CA) claiming the crypto asset is a threat to the U.S. dollar and Congressman Patrick McHenry (R-NC) sharing his own bullish comments on the long term utility of Bitcoin.
Today In: Money
A key usability issue with Bitcoin payments is that taxes may need to be paid in a situation where a capital gain has occurred, which could be when someone is simply buying a meal with Bitcoin at a local restaurant. Under current U.S. law, the use of Bitcoin to pay for goods or services is treated as a sale of those Bitcoin holdings, which is a taxable event.
In addition to dealing with the wild price fluctuations found in the cryptocurrency space, users must also track the gains made every time they want to use Bitcoin or another crypto asset as a medium of exchange — at least if they plan on paying the proper amount of taxes.
