U.S. Senators Patrick Toomey (R-Pa) and Kyrsten Sinema (D-Ariz) have joined forces to introduce a bill that would exempt digital currency transactions of less than $50 from taxes. The exemption would also apply to trades where the user makes less than $50.
As things stand, all transactions must be tracked, and taxes must be paid every time digital currencies change hands. The Virtual Currencies Tax Fairness Act, if passed into law, would exempt transactions of less than $50 and allow Bitcoin to be used for its original purpose; small casual transactions, as outlined in the white paper.
Recognizing the potential for Bitcoin and digital currencies to be used in everyday life, Toomey said, “While digital currencies have the potential to become an ordinary part of Americans’ everyday lives, our current tax code stands in the way.” It’s an astute observation by a Senator who had shown that he understands the true purpose Satoshi Nakamoto had in mind when he created Bitcoin. Toomey has vowed to do all he can to help the digital currency industry before he retires at the end of this session.
How likely is it that the Virtual Currencies Tax Fairness Act will become law? It’s not likely to happen in 2022 as the cost of living crisis and midterm elections take priority. However, there’s optimism that it or something similar could pass in early 2023.
Bitcoin was always peer-to-peer electronic cash
In the early days of Bitcoin, it was accepted at face value that Bitcoin was peer-to-peer electronic cash and that its intended purpose was to facilitate small, casual transactions that were prohibited by the costs of running a financial system reliant on trusted intermediaries.
The reason this was widely accepted is that it’s stated in black and white in the Bitcoin white paper. However, somewhere along the way, new entrants to the digital currency markets stopped reading Bitcoin’s foundational document, and a mass social engineering campaign by the likes of the Digital Currency Group swayed public opinion to view Bitcoin as a savings technology or digital gold. Furthermore, changes to Bitcoin’s code by BTC Core developers made the microtransactions it was capable of unviable as transaction fees skyrocketed.
Of course, money blinds the best of people, and with BTC’s meteoric rise and the overnight millionaires it minted left, right, and center, few were motivated to look back at the white paper and early writings of Nakamoto to discover what Bitcoin really is.
Thankfully, not everybody drunk the Kool-Aid. Entrepreneurs like Calvin Ayre, Stefan Matthews and Bitcoin’s inventor Dr. Craig Wright stood firm and refused to let the original Bitcoin die. Unlike the others, they didn’t sell out and instead invested vast quantities of time and money into reviving the original Bitcoin protocol and making it work as electronic cash. It exists today as Bitcoin SV.
If Bitcoin is to become the global peer-to-peer electronic cash system Satoshi envisioned, laws that make it possible to transact in small amounts without having to record and report everything is going to help a lot. The Virtual Currencies Tax Fairness Act would be a step in the right direction.
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